Electric vehicles (EVs) have emerged as a transformative force in the automotive industry, promising reduced carbon emissions and a cleaner, more sustainable future for transportation. Governments around the world are incentivizing the growth of the EV sector, and the Indian state of Uttar Pradesh (UP) is no exception. In this article, we delve into the key provisions and objectives of UP EV manufacturing Policy 2022
Vision for Uttar Pradesh: The policy outlines a visionary approach to make Uttar Pradesh a hub for electric vehicle manufacturing and related ecosystem development. This aligns with the broader national goal of reducing carbon emissions and dependence on fossil fuels.
Objectives: To achieve this vision, the policy establishes clear objectives:
- Promotion of EV Manufacturing: Encouraging the establishment of manufacturing units for electric vehicles, batteries, and related components.
- Job Creation: Generating employment opportunities by attracting investments and facilitating skill development.
- Environmental Sustainability: Reducing pollution and greenhouse gas emissions through the adoption of electric vehicles.
- Infrastructure Development: Building the necessary infrastructure, such as charging stations and research facilities.
Applicability: This policy is applicable to all eligible manufacturing projects within the state of Uttar Pradesh. It encompasses various categories of projects, from large-scale manufacturing units to micro, small, and medium enterprises (MSMEs).
Manufacturing Units: This term encompasses a range of entities, including electric vehicle manufacturing units, EV component manufacturing units, charging/battery equipment manufacturing units, and battery manufacturing units. The broad scope reflects the policy’s comprehensive approach to promoting EV-related industries.
Eligible Project: The policy classifies projects into various categories based on their scale and investments. These categories include:
- Integrated EV Project: Projects that manufacture at least two of the following: electric vehicles, EV batteries, EV/EV battery components, and testing & R&D facilities, with an eligible fixed capital investment of INR 3000 Crores or more.
- Ultra-Mega Battery Project: Battery manufacturing units with a minimum eligible fixed capital investment of INR 1500 Crores and a minimum production capacity of 1 GwH.
- Mega Project: Further divided into Mega EV Projects and Mega EV Battery Projects, with eligible fixed capital investments of INR 500 Crores or more for EVs and INR 300 Crores or more for batteries.
- Large Project: Also split into Large EV Projects and Large EV Battery Projects, with investments exceeding the limits defined for medium enterprises.
- MSME Projects: Projects with fixed capital investment in Plant & Machinery as per the classification of MSMED Act 2020.
Fixed Capital Investment for Manufacturing Unit: This definition clarifies the components included in the fixed capital investment, such as land, building, plant and machinery, utilities, tools, infrastructure, and equipment. Notably, the cost of land, whether purchased or allotted by government agencies, is a part of the investment.
Eligible Investment Period (EIP): The EIP varies based on project categories and ranges from 3 to 7 years, starting from the first date of investment falling within the policy’s effective period.
Nodal Agency: Invest UP is designated as the nodal agency responsible for managing the implementation of the policy for manufacturing projects.
Fiscal Incentives and Implementation Framework
Capital Subsidy: The policy offers capital subsidies based on the type and scale of the project. The rates range from 10% to 30% of eligible fixed capital investment, subject to maximum limits. Notably, the gross capacity utilization multiple (GCM) is introduced to ensure optimal capacity use.
- Capital Subsidy Rates:
- 1st two Integrated EV Projects and 1st two Ultra Mega Battery Projects each receive a capital subsidy at the rate of 30% of eligible fixed capital investment, with a maximum limit of INR 1000 Cr per project over 20 years in equal annual instalments.
- 1st five Mega EV Projects and 1st five Mega Battery Projects each receive a capital subsidy at the rate of 20% of eligible fixed capital investment, with a maximum limit of INR 500 Cr per project over 10 years in equal annual instalments.
- Large EV Projects and Large Battery Projects each receive a capital subsidy at the rate of 18% of eligible fixed capital investment, with a maximum limit of INR 90 Cr per project over 10 years in equal annual instalments.
- MSME Projects receive a capital subsidy at the rate of 10% of eligible fixed capital investment, with a maximum limit of INR 5 Cr per project over 2 years in equal annual instalments.
- Gross Capacity Utilization Multiple (GCM):
- GCM is introduced to ensure optimal capacity utilization.
- GCM of 1 is considered for the first year if the capacity utilization is 40% of the installed capacity.
- In subsequent years, GCM remains 1 if peak capacity utilization is 75% or more of the installed capacity.
- If peak capacity utilization is less than 75%, GCM is proportionately reduced.
- If peak capacity utilization is less than or equal to 10% of installed capacity, GCM is 0.
- Maximum Subsidy Amount:
- The subsidy under all categories is subject to an annual ceiling of INR 50 Cr.
- If the total admissible subsidy could exceed this ceiling, it will be prorated among the eligible beneficiaries.
Stamp Duty Reimbursement: Reimbursement for stamp duty on land purchase/lease is provided for different project categories and regions within Uttar Pradesh.
- Stamp Duty Reimbursement Rates:
- For Integrated EV Projects and Ultra Mega Battery Projects, 100% reimbursement of stamp duty is provided on the purchase or lease of land.
- For Mega EV Projects and Mega Battery Projects, 75% reimbursement of stamp duty is provided on the purchase or lease of land.
- For Large EV Projects and Large Battery Projects, 50% reimbursement of stamp duty is provided on the purchase or lease of land.
- For MSME Projects, 25% reimbursement of stamp duty is provided on the purchase or lease of land.
Other Incentives: Additional incentives include reimbursement for quality certification charges, patent registration fees, and skill development incentives for employees.
Implementation Framework: This chapter outlines the procedures for applying for incentives based on project categories, the role of nodal agencies, and the composition of committees responsible for reviewing applications and disbursing benefits.
Basic Terms & Conditions: Lastly, the policy emphasizes that projects availing incentives under this policy cannot simultaneously avail incentives under other state government policies. It also highlights that all incentives combined should not exceed 100% of fixed capital investment for manufacturing projects.
In conclusion, Uttar Pradesh’s Electric Vehicle Manufacturing Policy is a comprehensive framework designed to attract investments, promote manufacturing, and create employment opportunities in the electric vehicle sector. Chapters 1 and 2 introduce the vision, objectives, and key definitions, setting the stage for subsequent chapters that detail fiscal incentives, implementation, and ecosystem support. As electric mobility gains momentum in India, this policy aims to position Uttar Pradesh as a leader in the industry, contributing to a greener and more sustainable future. The complete details of Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy, 2022 is available here