Air pollution in India, especially in major cities, is a critical issue of concern, with air quality reaching hazardous levels due to various factors, including vehicular emissions. One of the most effective solutions to reduce air pollution is the widespread adoption of electric vehicles (EVs). EVs do not produce direct tailpipe emissions and can significantly reduce harmful greenhouse gas levels. By taking effective steps toward transitioning to electric mobility, India can inter alia reduce its dependence on fossil fuels, lower greenhouse gas emissions, and improve air quality. Additionally, the growth of EVs can foster a shift toward renewable energy sources, making transportation more sustainable and reducing the overall environmental footprint.
While the Central Government is constantly framing the policies for the improvement of the climate, including meeting the energy requirements from non-fossil resources, the respective state governments are also proactively coming forward in support of the efforts to save the environment from pollution. The Government of Uttar Pradesh had earlier previously waived road tax and registration fees for EVs bought within the first three years of the Uttar Pradesh Electric Vehicle Manufacturing & Mobility Policy 2022, which started on October 14, 2022. The exemption reportedly boosted the sales of EVs in the state and thereby significantly reducing the cost of new energy vehicles.
Following the footsteps of the Government of Uttar Pradesh, the Government of Telangana has recently announced a significant initiative to promote electric vehicles (EVs) within the state. This initiative, vide order dated November 16, 2024, provides a 100% exemption from road tax and registration fees for various types of EVs purchased and registered in Telangana for an initial period of two years, extending up to December 31, 2026. This exemption applies to the following vehicles, without any limit on the number of registrations:
- electric two-wheelers,
- electric four-wheelers (including commercial passenger vehicles such as taxis, tourist cabs, etc.),
- private electric four-wheelers,
- electric three-seater auto rickshaws (GHMC – Non-GMHC Areas)
- electric light goods carriers including three wheeled goods vehicles (GHMC – Non-GMHC Areas),
- electric tractors, and
- electric buses,
In Telangana, the exemption is particularly beneficial for electric buses operated by the Telangana State Road Transport Corporation (TSRTC), as they will enjoy this tax exemption for the entire lifetime of their vehicles. Additionally, buses purchased and registered in Telangana State, owned by industries and used exclusively for the purpose of transporting their employees, will also be exempt from these fees, provided they are not used for commercial purposes.
Moreover, this initiative is anticipated to help motorists save significantly when purchasing new electric vehicles. For example, individuals acquiring electric cars priced above a certain threshold can benefit from a substantial reduction in life time road tax, as the transport department has set a tax rate ranging from 7% to 19% for non-transport vehicles. Additionally, those buying electric two-wheelers can expect savings that vary based on the vehicle’s purchase price. The exemption from road tax and registration fees is particularly crucial for commercial passenger vehicles, such as taxis and tourist cabs, as it can significantly lower operational costs and encourage fleet operators to transition to electric options.
Looking ahead, the Telangana government had previously issued the Telangana Electric Vehicle & Energy Storage Policy 2020-2030 (“EV Policy”), which also provided various incentives, including retrofit incentives, 100% exemptions from road tax and registration fees only for the initial batch of EVs registered in the state. Notably, the previous cap on exemptions for the first few EVs has now been removed, allowing unlimited registrations for the initial period i.e. 2 years under the new EV policy. The success of this and other such policies will depend on several factors. First and foremost, there is a need for robust infrastructure development, particularly in terms of charging stations. The government must collaborate with private players to establish a widespread network of charging facilities, ensuring that EV users have convenient access to charging points. This infrastructure is essential for alleviating range anxiety among potential EV buyers and will play a pivotal role in the overall acceptance of electric vehicles in the market. Such electric charging infrastructure should not be limited to the cities and populated areas but also on highways, state roads, tourist places, petrol pumps, restaurants, malls, etc., so that customers feel confident that they can take their EV anywhere and would not be stranded on the road in the absence of charging of the EV.
Moreover, public awareness campaigns are vital to educate consumers about the benefits of electric vehicles. Many potential buyers may still need to learn about the long-term savings associated with EV ownership, such as lower fuel and maintenance costs. In addition to consumer education, the government should consider providing further incentives for manufacturers to produce electric vehicles locally. This could include subsidies for local production facilities or tax breaks for companies that invest in EV technology. By fostering a local EV manufacturing ecosystem, Telangana can create jobs, stimulate economic growth, and reduce dependency on imported vehicles.
Furthermore, the EV Policy should also address the issue of battery disposal and recycling extensively. As the number of EVs on the road increases, so will the need for sustainable battery management solutions. The government can play a crucial role in establishing guidelines outlining extended producer responsibility and establishment of facilities for battery recycling or refurbishment, ensuring that improper disposal practices do not undermine the environmental benefits of electric vehicles. Additionally, it is important to consider the charging times for batteries, as they affect user experience and the overall adoption of EVs. Regular feedback mechanisms should also be established to assess the effectiveness of the incentives and make provisions for necessary adjustments. This approach will ensure that the policy remains relevant and effective in achieving its goals.
With this initiative, Telangana joins other progressive states like Maharashtra, Gujarat, Tamil Nadu, and Kerala in offering incentives to boost EV adoption. The Telangana government’s comprehensive approach aims to create a conducive environment for electric mobility, thereby contributing to the reduction of carbon emissions and promoting sustainable transportation solutions.
Our Parting thoughts
The Telangana government’s decision to provide a 100% exemption from road tax and registration fees for EVs is a strategic move to encourage their adoption in the state. This initiative aligns with national sustainability goals and positions Telangana as a leader in promoting electric mobility in India. The financial incentives, coupled with the growing infrastructure for EVs, are expected to significantly transform the state’s transportation landscape and enhance the market for EVs in the region, ultimately benefiting both consumers and the environment.
Also, it is imperative that all the stakeholders, including government agencies, private companies, and consumers, work together to realise the full potential of these incentives and contribute to a cleaner, greener Telangana.
The author is Partner, BTG Advaya