• PLI
    Production Linked Incentives Schemes in India
    KNOW MORE

Tamil Nadu Powering through - EV policy

 

Image

 

“He (Man) will have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.” 

In his Nobel Prize speech, 1974, Friederich Von Hayek lucidly outlines the intricacy of policymaking to achieve the outcomes.

The Electric Vehicle Policy (EV policy) of Tamil Nadu is a case in point. The policy scales the depth and breadth of the value chain of the electric vehicle sector. It not only creates an enabling framework for the industry to grow but also pulls together the stakeholders and allows them to participate.

The world is at the cusp of the electric vehicle revolution and a few countries have adopted electric vehicle mobilities at various levels. India’s pledge to reduce the carbon emissions as per the COP21 – Intended Nationally Determined Contributions (INDCs) and to reduce dependence on oil has made it pertinent upon India to actively adopt EV. Electric Mobility is an under-explored sector and any policy surrounding it cannot be too specific, intervening and insisting but rather it should be accommodating, enabling and nudging. The EV policy elegantly achieves this and has developed a recipe to become the Capital of Electric Vehicle of South East Asia by leveraging its advantages.

The salient features are as follows:

Detroit of Asia for Electric Vehicles:

Chennai, Tamil Nadu is known as the Detroit of South Asia and is one of the top 10 places for the manufacture of the automobile and auto ancillaries. This has developed a mature auto ecosystem with a robust supply chain of MSMEs and skilled manpower. The auto giants of the world such as Daimler, Hyundai, Renault Nissan, Ford etc. have set up manufacturing. These companies leverage the advantage of three major ports 20 km away from one another for exports. The robust auto ecosystem has begun transitioning into the “Brave New World” of EVs. The EV policy has listed a range of incentives that will create a seamless transition into EV manufacturing. Apart from Capital Subsidy, land rebates, employment creation incentives, the government has proposed a one-time re-skilling provision for the existing employees in the production line. One of the unique aspects of the EV policy is that it intends to create EV clusters within the existing auto clusters in the state, enabling a transition for the existing auto manufacturers and ushering in the new players.

Incentivising New investments and expansions:

Having understood the critical role of the government to support investors the EV policy has carefully drawn out a list of critical parameters that also incentivise R&D and skilling.

Image_2

 

Powering through – Charging Ecosystem:

The Electric Vehicle and the charging ecosystem are analogous to the Chicken and Egg Syndrome and has split hairs of policymakers. The EV policy takes a stab at this by developing the charging infrastructure starting with major urban centres of the state. EV policy targets all major infrastructure of public gathering such as hotels, shopping malls, cinema halls, apartments. The State Government has gone to the extent of modifying building codes to accommodate the charging infrastructure. Besides, a charging station every 25 km will also be developed in the Public-Private Partnership (PPP) model. Tamil Nadu is a power surplus state with over 30 GW of installed capacity through nuclear, solar, wind and coal power plants.

One of the standout features is the provision for “Urban Mining” for Battery and Battery products, a massive opportunity for reverse logistics for the OEMs and the service sectors.

Inculcating the EV culture:

The budding EV sector’s success hinges on R&D, skilling and developing a specialised curriculum in technical universities. The EV policy brings together the State Government, Industry and Academia to develop Centres of Excellence towards R&D in EV. The Government is also set to develop a comprehensive curriculum for Higher education in Mechatronics – Battery Management, Power Electronic Controllers, Motors and sensor technologies. Tamil Nadu has more than 20 Universities among the list of top 100 universities in India (as per NIRF rankings).

Ather energy, the leading two-wheeler electric start-up was incubated in IIT Madras’ Research Park at Chennai is worth mentioning.

Tamil Nadu Skill Development Council (TNSDC) is also mandated to conduct vocational training in the Electric Vehicles through collaboration with Industries to train the relevant manpower and create employment.

Boosting demand:

Tamil Nadu ranks the 2nd largest in G(S)DP. Tamil Nadu having achieved 50% of the urbanization (highest in India), this is indicative of the upwardly moving middle class with a growing consumption appetite. The Government has offered a 100% exemption of Road tax for electric vehicles and has proposed to replace 5% of the existing public transport fleet with electric buses every year. The Transport Regulations are revised in this regard.

Although each of the salient features is briefly summarized above, one can mine through insights from the EV policy which has a business opportunity and value addition for all interested players.

Hyundai’s Kona, the first electric SUV has already been flagged off by the Hon’ble Chief Minister of Tamil Nadu. Investors from Korea, Japan, Taiwan, China and Europe are beginning to flock Tamil Nadu. Such investors are not only manufacturing auto components but also manufacturing Capital goods and heavy machinery. Tamil Nadu has already developed deep backward linkages with metal industries, capital equipment, trucking, warehousing and logistics. The EV policy has enhanced the forward linkages of market access and boosting demand thereby creating a conducive ecosystem for EV auto & allied business to thrive.

The Tamil Nadu team at Invest India and the Tamil Nadu Industrial Guidance and Export Promotion Bureau (IPA of Tamil Nadu) are at investors’ reach to allay aspersions concerning investments in the EV sector and Tamil Nadu in general.