What Explains Rajasthan’s Conservative Approach To Its EV Policy?

T Murrali

T Murrali

20 Jul 2021
10:51 AM
3 Min Read

According to the policy, the Rajasthan government will refund the state component of GST (SGST) to consumers, who will purchase EVs between April 2021 and March 2022.


With an aim to boost the sales of EVs in 2W and 3W segments, the government of Rajasthan has announced its electric vehicle (EV) policy. Thus, it has become the 17th state in the country to introduce an EV policy. 

However, the state's EV policy does not seem to be as attractive as those announced in recent times by Maharashtra, Gujarat and even Delhi.

It may be recalled that a host of states across India have announced their respective EV policies to promote electric mobility during the past few months. Some of them have focused on both demand creation and production boost-up through subsidies. 

Rajasthan's EV policy, however, primarily focuses on demand creation for zero-emission vehicles. As per the new policy, there will be cash subsidies for electric two- and three-wheelers. The state government will refund the state component of GST (SGST) to consumers, who purchases EVs between April 2021 and March 2022.

In addition to the SGST refund, e2W and e3W consumers will be eligible for additional cash subsidies in the range of INR 5,000 and INR 20,000, depending on the size of the battery, the policy stated. 

Accordingly, the e2Ws with battery capacity between 2kWh and more than 5kWh will receive cash benefits between INR 5,000-10,000, while e3Ws with battery capacity between 3kWh and more than 5 kWh, will be eligible for cash benefits between INR 10,000-20,000.

Rajasthan vs the rest

Significantly, there is no mention of any cash subsidies for electric passenger vehicles or electric buses, which were part of the policies announced by several other states earlier. Even the quantum of subsidy for e2Ws and e3Ws has been kept lower than those announced by Maharashtra, Gujarat and Delhi. 

Delhi was the first state to announce a comprehensive policy for EVs in August 2020. The state aims to register 500,000 EVs in the city by 2024 under this policy. In addition, the state government announced a subsidy of up to INR 30,000 for e2W and e3Ws. 

Maharashtra, on the other hand, had given a couple of options. For the early adopters (purchases made before December 31, 2021), the maximum benefit for e2Ws is INR 44,000 and e3Ws is INR 92,000. However, for purchases made from January 1, 2022, the benefits will drop to INR 29,000 for e2Ws and INR 57,000 for e3Ws. 

Besides, the Maharashtra government has also pledged to purchase EVs for all its services from April 2022. It also aims to electrify 25% of public transport by 2025 in six urban centres such as Mumbai, Pune, Nagpur, Aurangabad, Amravati and Nashik. 

Gujarat, on the other hand, hopes to make the state a manufacturing hub for EVs and ancillary equipment. The state offers INR 20,000 subsidy for e2Ws and INR 50,000 for e3Ws. It targets 200,000 EV registrations, including 110,000 e2Ws, 70,000 e3Ws and 20,000 e4Ws.

Tremendous promise

At the recently concluded e2W Summit organised by Mobility Outlook, Naveen Munjal, MD, Hero Electric said e2Ws would be 20% of the ICE market in the next five years, reaching about four million units in sales. The factors that support the growth include falling e-vehicle prices and rising petrol prices that increase the total cost of ownership. 

Nagesh Basavanhalli, MD & CEO, Greaves Cotton said that due to immense benefits, the e3Ws gave the same livelihood to many after migrating from cities to their natives during the pandemic, bringing development at the grassroots level. The demand for e3Ws increased due to e-commerce, he mentioned.

According to SIAM, two-wheeler sales peaked in FY19 at 21,179,847 units, which grew from 16,455,851 units in FY16. Three-wheelers, meanwhile, achieved peak sales of 701,005 units in FY19, up from the 538,208 units it accounted for in FY16.   

With the focus shifting to cleaner mobility, and demand for personal mobility also growing due to the pandemic, e2W sales are on a rise. In addition to the incentives proposed by the revised FAME II policy, state governments are looking to lure their citizens into resorting to EVs. 

Take a look at the sales of EVs in Q1 CY21, which saw sales surge by 59% from the previous quarter's (Q4 CY20) sales to register 61,396 units. Region-wise, Uttar Pradesh has the maximum registered EV sales (23%) in India among all the states/ UTs, followed by Tamil Nadu (13%) and Karnataka (10%). 

Of the total 2W sales in the country, Maharashtra holds 9.7% share, while Rajasthan and Gujarat have a share of nearly 6.3%, and Delhi accounts for 2.2%. Delhi is less because the share of four-wheelers is substantial. Maharashtra holds about 50% more 2Ws than Rajasthan and Gujarat, who have an equal share.

While many states have taken an aggressive stance to push electric mobility, it is not clear why Rajasthan has taken a somewhat conservative approach. Does it mean the state is not leveraging the entire potential? Time will tell.

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