The Madhya Pradesh government has announced a maximum state subsidy of ₹50,000 (~$570.99) per four-wheeler electric vehicle in its new draft electricity vehicle (EV) policy 2025.

The policy will be valid for five years.

It covers battery and fuel-cell electric vehicles.

The Urban Development and Housing Department under the state government will be the nodal department, and MP Power Management Company will be the nodal agency for the program.

Policy targets

• Bhopal, Indore, Jabalpur, Gwalior, and Ujjain will be designated as model EV cities.
• 40% new registrations in electric two-wheelers and 100% of commercial fleet.
• 70% of new registrations in e-three wheelers in both passenger and freight segment.
• 15% of new registrations in the e-four-wheeler segment.
• 40% of new registrations in the electric bus segment.
• Conversion of all state government vehicles to EVs.

Regulatory Exemptions

• Exemption granted for electric commercial public transport vehicles.
• Electric three-wheelers will be allowed only in certain areas or outside major cities.
• Corporates will be allowed to own and operate EVs for feeder transport.
• Registration will be allowed for vehicles retrofitted with an electric motor and an electric powertrain using advanced battery technologies.

SubsidiesElectric cycles will be eligible for a maximum capital subsidy of ₹5,000 (~$57.09) for up to 30,000 EVs with an ex-factory price of less than ₹40,000 (~$456.792).

Electric two-wheelers will be eligible for a maximum of ₹10,000 (~$114.198) or up to ₹5,000 (~$57.099)/kWh, whichever is lower. The subsidy can be availed for a maximum of 100,000 EVs with an ex-factory price of less than ₹150,000 (~$1,712.97).

Electric three-wheelers will be eligible for a maximum subsidy of ₹20,000 (~$228.396) per vehicle or up to ₹5,000 (~$57.099)/kWh, whichever is lower. The subsidy can be availed for a maximum of 15,000 EVs with an ex-factory price of less than ₹500,000 (~$5,709.9).

Electric four-wheelers will be eligible for a maximum subsidy of ₹50,000 (~$5,709.9) per vehicle pr up to ₹2,500 (~$28.54)/kWh, whichever is lower. The subsidy can be availed for a maximum of 10,000 EVs with an ex-factor price of less than ₹2.5 million (~$28,549.5).

Light commercial vehicles will be eligible for a maximum subsidy of ₹50,000 (~$5,709.9) per e-Light commercial vehicle or ₹5,000 (~$57.099)/kWh, whichever is lower. It will be eligible for a maximum of 5,000 vehicles.

E-buses comprising school buses, ambulances, and government buses will be eligible for a 10% incentive on ex-factory price or ₹1 million (~$11,419.8) per vehicle, whichever is lower. The subsidy can be availed of up to 100 e-buses.

There is also a 5% interest subvention on loans procured to purchase more than 20 e-buses.

Additionally, there will be a 100% motor vehicle tax and registration fee exemption for all vehicles.

Zero-emission electric trucks and tractors will also be eligible for 100% road tax and registration charge exemption.

Parking Incentives

There will be a one-year parking fee exemption for electric cycles, two-wheelers, three-wheelers, four-wheelers, and light commercial vehicles using parking lots run by urban local bodies.

New resident welfare associations must allocate 20% of open parking spaces for EVs.

The policy proposes earmarking

25% of roadside parking spaces, and parking spaces in educational institutions, commercial complexes, and government offices for EVs.

Additional Incentives

• 50% exemption from paying state toll tax for EVs registered within the first policy period.
• If the battery is sold separately, the incentive will be split between the vehicle owner and the battery owner.
• To encourage EV adoption, there will be interest subvention on vehicle loans and State Goods and Services Tax (SGST) reimbursement.
• The government will develop green zones/e-mobility zones within the EV model cities to exclusively use electric vehicles.

EV charging points

Buildings must enable additional power loads to facilitate the power requirement of charging points.

All new residential buildings will be incentivized with property tax rebates for installing private charging points.

Commercial complexes, housing societies, and residential townships with a built-up area of 2,000 sq.mt and above must have charging stations.

Agricultural land acquired to set up battery swapping/charging stations will receive a 100% exemption in land conversion charges if the unit is registered under a woman’s name.

The nodal agency may develop a workplace charging policy to encourage EV usage.

Incentives for public charging stations

• Subsidy of 25% on the value of charging equipment/machinery for the first 300 charging stations up to a maximum subsidy of ₹150,000 (~$1,712.97) for small charging stations
• Subsidy of 25% on the value of charging equipment/machinery for the first 100 charging stations up to a maximum subsidy of ₹300,000 (~$3,425.94) for medium-sized charging stations
• Subsidy of 25% on the value of charging equipment/machinery for the first 100 charging stations up to a maximum subsidy of ₹1 million (`$11,419.8) for large charging stations
• Battery swapping stations will be eligible for a one-time capital subsidy on eligible fixed capital investment for service providers at 25% and up to a maximum of ₹500,000 (~$5,709.9) for the first 100 swap stations
• 100% SGST reimbursement on batteries

Incentives for EV Manufacturing

The incentives will be disbursed in three annual installments.

The government will provide fixed capital investment (FCI) as follows:

• 25% of FCI up to a maximum of ₹1.5 million (~$17,129.7) for 20 units for micro industry
• 20% of FCI up to a maximum of ₹4 million (~$45,679.2) for 10 units for small industry
• 20% of FCI up to a maximum of ₹5 million (~$57,099) for five units for medium industry
• 10% of FCI up to a maximum of ₹100 million (~$1.14 million) for three units for large industry
• 10% of FCI up to a maximum of ₹200 million (~$2.28 million) for the first two units in the state for mega industry (includes ultra-mega industry)

New industries can avail an interest rebate on loans as follows:

• For an investment range of ₹500 million -₹3 billion (~$5.7 million-~$34.25 million), a 5% interest rebate for five years will be provided up to ₹500,000 (~$5,709.9) per annum
• For an investment range of ₹3 billion -₹5 billion (~$34.25 million-~$57.09 million), a 5% interest rebate for five years will be provided up to ₹2 million (~$22,839.6) per annum
• For an investment range of ₹5 billion -₹ 50 billion (~$57.09 million-~$570.9 million), a 5% interest rebate for 5 years will be provided up to ₹10 million (~$114,198) per annum
• For an investment range above ₹50 billion (~$570.9 million), a 5% interest rebate for 5 years will be provided up to ₹40 million (~$456,792) per annum

The draft policy provides for a 100% reimbursement of stamp duty and transfer duty paid by the industry on the purchase or lease of land meant for manufacturing EVs or EV components.

It also proposes 100% stamp duty reimbursement for the lease of land/shed/buildings, mortgages, and hypothecations.

Stamp duty will be reimbursed only once on the land.

There will also be a 100% reimbursement of net SGST across three years for micro and small industries, five years for medium industries, and seven years for large industries.

This reimbursement will be limited to 100% of capex or for the period stated, whichever is earlier.

All incentives applicable to EV and component manufacturers will be provided to battery refurbishers exploring multi-life solutions.

The government will provide ₹20 million (~$228,396) for procuring essential research and testing equipment.

Pilot projects

Pilot projects will be envisioned separately for trucks and tractors, lasting two years.

The pilot will be for a maximum of 20 trucks and 30 tractors.

Each department involved in the pilot with trucks will get an initial subsidy of 20% of the ex-factory cost or ₹10,000 (~$114.198)/kWh, whichever is lower.

Each department involved in the pilot with tractors will get an initial subsidy of 20% of the ex-factory cost or a maximum of ₹250,000 (~$2,854.95), whichever is lower.

Funding

The initiative will be funded by imposing a surcharge on polluting vehicles. 

The revenue for the funds will be sourced as follows:

• Implementation of an air-quality improvement/pollution cess of ₹0.1 (~$0.00114) per liter on diesel vehicles
• Raising road taxes for luxury petrol and diesel valued above ₹2.5 million (~$28,549.5)
• Any additional cess or levy as deemed necessary by the nodal agency
• Penalties paid by violators within the green zones
• The remaining gap in funding will be met by the finance department

In 2022, Madhya Pradesh State Tourism Development Corporation requested a proposal to set up EV charging stations at various facilities for 10 years.

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