Punjab’s new industrial policy puts electric vehicles at the centre of investment push
Punjab is set to launch an industrial policy in January that emphasizes electric vehicles. The policy will provide sector-specific incentives, including enhanced financial benefits, to promote clean mobility, reduce emissions, and create new jobs in the manufacturing sector.
NEW DELHI: The electric vehicles (EV) sector is expected to take centre stage in Punjab, as the state lines up an expanded package of incentives to attract fresh investments under the new industrial policy that is likely to be launched in January.
The upcoming policy, which is in the final stages of consultation, will offer sector-specific incentives for electric vehicle manufacturing, including a sales-linked incentive on the lines of the central government's production-linked incentives scheme for automobiles (PLI-Auto), along with concessions on land, power tariffs and stamp duty.
Sanjeev Arora, the minister for industry and commerce, investment promotion, power and NRI (non-resident Indians) affairs in the Punjab government, told Mint that the state is revamping its industrial policy to attract manufacturing in new-age sectors such as clean mobility, with electric vehicles that have zero vehicular emissions getting more incentives than the traditional sectors.
“Suppose, in the new industrial policy, if we are offering 100% incentives to other sectors, then the incentives to EV sector will be 125%. Additionally, we are planning to introduce state's sales-linked incentive to EV sector on the lines of the Centre’s PLI-Auto scheme. The state scheme can be clubbed with Centre's scheme," Arora said.
“The policy would offer a bouquet of incentives for EV manufacturing and component units including state GST exemption, stamp duty exemptions, electricity duty waivers and faster approvals," he added.
He said the focus on EVs aligns with Punjab’s clean energy road map and its broader push to reduce emissions while creating new manufacturing jobs. The government is also looking to leverage Punjab’s strong road connectivity and skilled workforce to position the state as a cost-effective alternative for technology firms.
The Punjab government is in talks with Mahindra & Mahindra's subsidiary SML Isuzu, which was acquired in August and rebranded as SML Mahindra, as well as EV component maker Hero Cycles, and local commercial vehicle maker EVAge, Arora said.
Queries emailed to Mahindra & Mahindra and Hero Cycles remained unanswered.
To be sure, Punjab, known for its cycles and auto parts manufacturing, is not alone in courting EV manufacturers. Other states such as Maharashtra, Tamil Nadu, Karnataka and Haryana have attracted electric vehicle makers, charging infrastructure manufacturers, and spare parts makers to invest.
Mint had reported earlier in August that companies such as electric scooter maker Ather Energy, EV charger maker Everta, and electric carmaker VinFast had lauded state government policies geared towards manufacturing in the EV ecosystem.
These policies largely provided tax incentives, as well as incentives for land and power use. States are also increasingly offering such incentives in new policies.
In its new EV Policy 2025-2030, Karnataka, a state with more than 5,400 public EV charging stations and over 250,000 EVs on its roads, has offered capital subsidies on the manufacturing units set up in the state.
This includes incentives worth 20-25% of the upfront cost of fixed assets for EV makers, manufacturers of EV components, charging infrastructure and battery swapping infrastructure, as well as makers of EV battery packs and cells.
Upfront incentives for manufacturing are also a part of Maharashtra’s offering to these companies. Its new EV policy, also set to run from 2025 to 2030, Maharashtra offers 20% fiscal incentives for manufacturers in the EV sector, since the government identified it as a “thrust sector".
Under Tamil Nadu’s 2023 policy, EV manufacturers could choose between a 100% waiver on state goods and services tax (SGST) for every vehicle sold in a 15-year window, a turnover-linked subsidy, or a 10% capital subsidy on new manufacturing units worth over ₹50 crore. The policy also allowed investors a 20% capital subsidy on new EV battery manufacturing projects set up in the state.
The rise of state government sops for the EV sector comes as the electrification of road transport is increasing. More than two million electric vehicles were sold in the country in 2025, up from about 1.9 million in 2024. But meeting crucial electrification targets will take some more time.
EV financiers were of the view that 2025 showed promising advances towards EV adoption, but that more investment was needed, along with expansion of production capacities. "If we look at 2025, we are definitely on track for 30% adoption by 2030, however the momentum across the ecosystem needs to continue uniformly since we can grow only as fast as our slowest ecosystem participants," said Kunal Mundra, founder and chief executive officer (CEO) of Astranova Mobility, a Gurugram-based EV financier.
Vehicle makers and component manufacturers need to strengthen value engineering and R&D investment to improve the total cost of operation for EVs through stronger performance at a lower cost. Simultaneously, production capacities, especially in larger form factors like buses, need to increase significantly, he said.
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