The Uttar Pradesh government has decided to provide a total subsidy of Rs 440 crore to customers purchasing electric vehicles (EVs) over the next five years. It is noteworthy that only Rs 85 crore was spent on this head in the past three years. Now, the government has set a target to disburse Rs 355 crore in subsidies in the next two years. With such a substantial subsidy in place, UP is expected to become the largest market for electric vehicles in India.Currently, the state holds an 18% share of the total EV sales in the country.
Focus on Both Sales and Manufacturing of EVs
In a meeting of the High-Level Authorised EV Committee, special emphasis was placed not only on the sale of electric vehicles but also on their manufacturing within the state. Under the Uttar Pradesh Electric Vehicle and Mobility Policy-2022, a 100% exemption on registration fees and road tax was provided for all EVs registered in the state during the first three years. This exemption was valid until October 13, 2025. For the fourth and fifth years, financial incentives were offered for vehicles manufactured and registered within Uttar Pradesh.
Extension of Subsidy to Promote Zero-Emission Vehicles
The decision to extend the policy by two more years was primarily aimed at promoting zero-emission vehicles. A review of major EV policies across India revealed that states like Delhi, Maharashtra, Karnataka, Madhya Pradesh, Andhra Pradesh, and Tamil Nadu offer up to 100% exemption on registration fees and road tax for EVs. The committee found that Uttar Pradesh could also continue offering a 100% exemption over the next two years. This move is expected to increase the adoption rate of EVs in the state.
UP’s Market Share and Need for Greater EV Adoption
According to the NITI Aayog report 2024, Uttar Pradesh falls under the ‘Performer’ category. During the financial year 2024-25, the state accounted for 18% of the total EV sales in the country. Based on this data, the government concluded that there is still a strong need to encourage EV acceptance in the state. This will help develop the EV ecosystem and accelerate EV usage within Uttar Pradesh.
Removal of Manufacturing Condition and Industry Attraction Efforts
Unlike other states, Uttar Pradesh has removed the condition that subsidies would only apply to vehicles manufactured within the state for the next two years. This is because large-scale EV manufacturing facilities are not yet available in the state. However, the government is actively attracting auto companies and component manufacturers through a dedicated Auto Desk established under the Invest UP initiative. Companies from Japan and Germany have shown interest and may soon establish EV manufacturing hubs in Uttar Pradesh.
Economic and Environmental Benefits of the Policy
This policy initiative by the Uttar Pradesh government is expected to be beneficial not only from an environmental perspective by promoting zero-emission vehicles but also for the economic and industrial development of the state. By positioning Uttar Pradesh as a major player in the EV industry, the government aims to drive sustainable growth and establish a strong foothold in the rapidly expanding electric vehicle market.
