Assessing Fiscal Trade-Off in Uttar Pradesh’s Shift Towards Electric Mobility

The rapid adoption of electric vehicles (EVs) in India stands for a significant shift toward sustainability. The accelerating adoption of EVs in Uttar Pradesh, driven by state and central government incentives such as road tax exemptions, registration fee waivers, and demand-side subsidies under schemes like Faster Adoption and Manufacturing of Electric Vehicles (FAME) India. With the rising share of EVs and government support in the form of incentives and tax exemptions aiming to promote sustainable mobility, there are implications for the state’s fiscal situation and the adoption of EVs in different segments of vehicles. This study focuses on two key aspects of Uttar Pradesh’s EV transition: quantifying the expected fiscal expenditure associated with EV-related subsidies and tax exemptions, and which segment of EVs is having more influence from given incentives. Using secondary data from the FAME India dashboard, the VAHAN vehicle registration portal, and UP Budget documents, the research estimates the direct costs incurred by the state through financial incentives. Fiscal expenditure to promote EV adoption is estimated using a formula based on the policy guidelines. The findings suggest that even with continued provisioning of EV subsidies and exemption from road tax, state governments still have a lower impact on fiscal revenue due to factors such as lower adoption of EVs, the amount of subsidy allotted to different segments of EVs, and road tax exemption provisioned as per policy. The findings underscore the importance of balancing environmental ambitions with fiscal stability and suggest the need for a phased, data-driven approach to incentivize growth of electric mobility in Uttar Pradesh.