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Haryana Electric Vehicle Policy, 2022: Important Legal Considerations

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The government of Haryana came up with a comprehensive policy on electric vehicles for a period of 5 years, with effect from 08th July 2022. This policy supplements various other initiatives taken by the Government of India through FAME (Faster Adoption and Manufacturing of Electric Vehicles in India) schemes under under the National Electric Mobility Mission Plan (NEMMP).

The policy aims to encourage and incentivize Manufacturing of Electric Vehicles, major components of EVs, batteries for EVs, development of charging infrastructure in Haryana and to promote research and development on e-mobility.

Coverage of the policy

— On the basis of type of industry

The policy incentives are available for manufacturers of electric vehicles (both battery and fuel-cell) as well as for Hybrid electric vehicles, EV components, and for enterprises setting up charging infrastructure. The policy has elaborately defined all these categories of electric vehicles and the applicability of policy for a certain type of vehicle needs to be evaluated on a case-to-case basis.

However, large and mega units have to compulsorily setup a battery disposal/recycling/material recovery facility at their proposed plant for claiming any incentive under the policy.

— On the basis of age of industry

The policy is applicable to

• all the new units in the applicable categories
• those existing units which
  • undertakes expansion/ diversification/ complete conversion, or
  • makes an additional investment in the EV sector of at least 50% of the fixed capital investment of the existing unit, or
  • converts completely into EV/ EV components/ EV battery manufacturing.

— On the basis of location

The entire area of the state of Haryana has been divided into 140 blocks. The Industries department has classified these blocks into 4 categories, namely Category A Blocks (Comprising of the industrially developed areas), Category B Blocks (Comprising of the areas of ‘intermediate development’), Category C Blocks (Comprising of industrially backward areas) and Category D Blocks (Comprising of most industrially backward areas). The benefits under the policy can be availed by those units which are located in

• only Govt approved Industrial Estates/IMTs in Category A blocks.
• anywhere in Category B, C and D blocks

Incentives for manufacturers under the policy

— Capital subsidy of fixed capital investment (FCI)

The state government will provide subsidy of up to 25% of the FCI to a limited number of units in each category of industry (mega, large, medium, small, micro) on a first-come first-serve basis.

— Seed and Conversion Fund

The state government will provide one-time support as a seed funding for existing units converting completely into EV manufacturing, EV component manufacturing or EV Battery manufacturing at the rate of 25% of the book value of plant and machinery or INR 2 crore, whichever is lower. However, this would be applicable to a limited no. of units on a first-come first-serve basis.

— Net SGST Reimbursement

Those units which could not or does not intend to avail the benefits of capital subsidy can avail net SGST reimbursement of 50% of the applicable net SGST for period of 10 years or up to realization of the FCI, whichever is earlier.

However, if the net SGST is less than 5% of the FCI in a year or project having inverted duty (where rate of tax on inputs purchased is more than rate of tax on outward supplies), investment subsidy up to 5% of the FCI may be given for 8 years in equal instalments subject to an annual cap of INR 5 crores.

— Reimbursement of stamp duty

The state government will reimburse 100% of the stamp duty on purchase /lease of land/shed/buildings to be used for manufacturing Electric Vehicles, major components of EVs, batteries for EVs and charging infrastructure after commencement of commercial production. However, subsequent transactions on the same property would not be eligible for reimbursement.

— Power subsidy

• Special tariff for EV manufacturers and charging infrastructure
• 100% exemption on electricity duty for 20 years
• 24x7 uninterrupted power supply

— Incentives on setting up water treatment plant

For Medium, Large, Mega and Ultra-Mega units, the state government will reimburse 50% of the cost of water treatment plant up to INR 50 lakh for first 5 units in each category.

— Reimbursement of patent expenses

The state government will reimburse 100% of the actual patent expenses (including filing fees, consultancy fees, search fees, maintenance fees and Publishing fees) with a maximum of INR 25 lakh for domestic and international patent registrations for all the eligible manufacturing units under the policy.

— Employment Generation Subsidy

For industries in category B, C and D blocks, the state government will extend subsidy of INR 48,000 per Haryana-domiciled employee per annum for 10 years for direct employment on pay roll or contract with valid ESI/PF number.

Concluding Remarks

The electric vehicle policy has provided for various incentives for the manufacturers in a liberal manner but most of the incentives are limited and are available on the first-come first-serve basis. Moreover, there are certain caveats with respect to location, age, and type of industry. Therefore it is important for industries to ensure the applicability of the incentives before planning any capital investment. It is also important that the application to avail benefits under the policy is made at the right time and in the right format so as to avoid delays and rejection.

Gazette Notification

Download the gazette notification No. 20/01/2022-4IB-I dated 08th July 2022, issued by the Government of Haryana.