Andhra Pradesh has unveiled its Sustainable Electric Mobility Policy 4.0 for the duration between 2024 and 2029. The policy aims to make the state a global hub for high-value electric vehicle (EV) manufacturing while encouraging the adoption of e-mobility solutions and sustainable practices, with a goal of achieving carbon neutrality (Scope 1 emissions) in the transport sector by 2047.

Key targets for the end of the policy period include:

Vehicle Registration Goals

• A minimum of 200,000 new electric two-wheelers.
• A minimum of 10,000 new electric three-wheelers.
• A minimum of 20,000 new four-wheeler battery electric vehicles.

Charging Infrastructure Expansion

• Ensure one charging station every 30 kilometers along notified green channels.
• Establish a charging station density of one per 3×3 km grid in designated e-mobility cities.

The policy also envisions utilizing a corpus fund of ₹5 billion (~$58.94 million) for developing e-mobility cities and establishing 100 incubation centers for e-mobility startups. Additionally, it aims to achieve 100% electrification of the Andhra Pradesh State Road Transport Corporation fleet.

Financial Incentives for MSME Manufacturers

Micro, Small, and Medium Enterprises (MSME) manufacturers can claim an investment subsidy of 35% of the eligible fixed capital investment, up to a maximum of ₹70 million (~$825,188). Alternatively, the manufacturers can claim 5% of the annual turnover for three years, not exceeding ₹100 million (~$1.17 million).

For enterprises run by BC/SC/ST/minority/physically abled/transgender investors domiciled in Andhra Pradesh, subsidies include 45% of the eligible fixed capital investment, up to a maximum of ₹70 million (~$825,188). Alternatively, such investors can claim 15% of the annual turnover for three years, not exceeding ₹100 million (~$1.17 million).

Additional Incentives

• Annual power tariff reimbursement at ₹1 (~$0.012)/kWh, capped at ₹1.5 million (~$17,680 )/enterprise for six years.
• A 100% net Subsidy for State Goods and Services Tax (SGST) reimbursement, subject to limits based on the fixed capital investment.
• A 50% reimbursement of electricity duty for six years (specific to battery manufacturers for EV use).
• Subsidies of ₹200,000 (~$2,357) for quality certification, ₹200,000 (~$2,357) for patent costs, and ₹100,000 (~$1,178) annually for three years for training expenses.
• Full reimbursement of stamp duty, registration charges, and land conversion fees for industrial use.

Overall claims, excluding SGST reimbursement, will not exceed 75% of the fixed capital investment.

Financial Incentives for Large Manufacturers

Large manufacturers are eligible to claim investment subsidies based on the annual turnover for the domestic value addition as indicated in the table below:

 

For BC/SC/ST/minority/specially abled/transgender enterprises, the subsidies will be 10% of the annual turnover for three years and up to 25% of the fixed capital investment.

Early Bird Incentives

Enterprises participating early will receive an investment subsidy of 30% of the fixed capital investment or up to 40% for specific value-added activities under the AP Industrial Development Policy 4.0. Units availing of this offer are ineligible for other investment subsidies under the new policy.

Top-up Production Linked Incentive

The state government will provide 10% of the total incentive approved under central government programs, capped at 5% of the fixed capital investment. This incentive will be disbursed in five annual installments.

Decarbonization Subsidy

Decarbonization subsidy will encourage clean production, waste reduction, and resource efficiency. Incentives vary by project category and are capped at 6% of the fixed capital investment.

Additional Incentives

• Reimbursement of 100% net SGST paid to the state, limited to 100% of fixed capital investment.
• Reimbursement of power costs at ₹1 (~$0.012)/kWh, with an annual cap of 10% of the power bill for two years.
• A 50% reimbursement of electricity duty for two years (applicable only to battery manufacturers).
• Full reimbursement of stamp duty, registration charges, and land conversion fees (one-time only).

Support for Charging/Swapping Station Operators

Government sites will be offered through competitive bidding at a nominal rate of ₹1 (~$0.012)/sq.ft for private operators.

Investment subsidy will be provided at 25% capital on the public charging station setup costs, capped at ₹300,000 (~$3,536)/station for the first 5,000 stations over five years.

The government will introduce a separate EV tariff category with time-of-day and dynamic pricing mechanisms. EV charging stations (including swapping stations) can avail input power from any open-access generator.

Mandates for Charging Infrastructure

New permits for commercial complexes, housing societies, and residential townships with a built-up area of 5,000 sq. mt. or more must include charging stations and public parking spaces must also provide charging stations.

Municipalities will issue provisional permissions online for setting up charging or battery-swapping stations, with verifications conducted post-sanction.

City codes, municipal rules, and regulations will be updated to facilitate charging infrastructure in public and private buildings.

Support for charging and swapping stations will extend beyond the initial 5,000 stations to ensure a density of one charging station every 30 km along green channels and one station per 3×3 km grid in e-mobility cities.

Support to Park Developers

To encourage the development of private industrial parks, the Andhra Pradesh government has introduced the AP Policy for Establishment of Private Industrial Parks with ‘Plug-and-Play’ Industrial Infrastructure.

The Department of Industries & Commerce, or its authorized agency, will implement this policy.

Incentives for Park Developers:

Nano and MSME park developers can avail of capital subsidies of up to ₹500,000 (~$5,893)/acre.

Large and mega industrial park developers can avail of capital subsidies of up to ₹300,000 (~$3,536)/acre.

There will be a 100% exemption for conversion charges for agricultural to non-agricultural land, changes of land use in the master plan, layout approval costs, and stamp duty and registration charges for land pooling for industrial parks.

Support to Recyclers, Scrapping Facilities, and ATS Operators

Aligned with the Indian government’s Vehicle Scrapping Policy, Andhra Pradesh aims to create an ecosystem to phase out older, polluting vehicles.

The state will provide an investment subsidy of 45% of the eligible fixed capital investment up to ₹70 million (~$825,188) for Automated Testing Centers operators and ₹100 million (~$1.17 million) for Registered Vehicle Scrapping Facility (RVSF) operators.

Further details include:

• A 50% rebate on land cost, capped at ₹2 million (~$23,572).
• Power tariff reimbursement of ₹2 (~$0.024)/kWh for six years, capped at ₹1.5 million annually.
• A 75% reimbursement for quality certification expenses (consulting fees included), capped at ₹300,000 (~$3,536).
• A 100% of net SGST is paid to the state and is limited to 100% of eligible fixed capital investment.
• Full reimbursement of stamp duty and registration charges for industrial land purchase (one-time only).
• A 100% reimbursement of land conversion fees.

Purchase subsidy

To promote the adoption of EVs, the Andhra Pradesh government will provide purchase incentives to buyers purchasing or registering EVs in the state.

Eligible vehicles include electric two-wheelers (e-2Ws), electric three-wheelers (e-3Ws), e-buses, e-goods carriers, and e-tractors. These vehicles can be bought for either personal or commercial use.

Buyers can avail of a purchase incentive of 5% of the ex-showroom price, provided the discount is passed on at the point of sale. Additionally, a 10% purchase incentive is available if the buyer submits a certificate of deposit from a recognized RVSF, applicable to the same category of vehicles.

The incentives are subject to a price cap, applicable only if the vehicle’s ex-showroom price does not exceed:

• e-2W: ₹100,000 (~$1.178)
• e-3W: ₹200,000 (~$2,357)
• e-Bus: ₹20 million (~$235,730)
• e-Goods Carrier: ₹500,000 (~$5,893)
• e-Tractor: ₹800,000 (~$9,429)

These incentives are valid for vehicles sold and registered up to March 2027. They will be directly paid to individual buyers or consumers, with modalities established by the concerned department. Hybrid EV vehicles are excluded from these incentives.

All EVs registered in the state will be given 100% exemption on road tax for five years. There will be no road tax exemption for hybrid four-wheelers.

Research and Development Support

The Andhra Pradesh government will provide a research grant of ₹2.5 billion (~$29.46 million) to fund innovative solutions research in the mobility space. In coordination with the National Automotive Testing and R&D Infrastructure, the state will set up a quality testing center for EVs accessible to all startups and manufacturers in the sector.

EV sales in India reached 332,730 units in the third quarter (Q3) of 2024, a decline of over 11% year-over-year against the 372,387 units sold in the same period of 2023. EVs account for 5.8% of overall automobile sales, which totaled 5,697,879 units in Q3 2024.

In September, the Union Cabinet approved the ‘PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Program,’ and the ‘PM-eBus Sewa-Payment Security Mechanism (PSM) Program.’ The PM E-DRIVE Program, with a total outlay of ₹109 billion (~$1.29 billion), focuses on providing demand incentives, deploying EVs, and developing charging infrastructure to support wider EV adoption.