The state of Punjab is gearing up to make a significant push into the electric vehicle (EV) sector with a revamped industrial policy set for launch in January. The policy aims to position Punjab as a competitive hub for clean mobility manufacturing by offering a significantly enhanced package of financial and operational incentives specifically tailored for the EV industry.
Supercharged Incentives for Electric Vehicles
The upcoming policy, currently in its final consultation stages, will provide sector-specific benefits that surpass those offered to traditional industries. Sanjeev Arora, Punjab's Minister for Industry and Commerce, Investment Promotion, Power and NRI Affairs, revealed that if other sectors receive 100% incentives under the new framework, the EV sector will be granted a superior 125% incentive package.
This aggressive strategy includes introducing a state-level sales-linked incentive scheme modelled on the central government's Production-Linked Incentive (PLI-Auto) scheme. Arora confirmed that the state's scheme can be combined with the central government's offering, providing a dual benefit for investors. The comprehensive "bouquet of incentives" for EV and component manufacturing units includes exemptions on State GST, stamp duty, and electricity duty, alongside promises of faster regulatory approvals.
Aligning with Clean Energy and Job Creation Goals
The government's focus on electric vehicles is a strategic move aligned with Punjab's clean energy roadmap. The policy is designed not only to reduce vehicular emissions but also to create new manufacturing jobs within the state. Officials aim to leverage Punjab's existing strengths—its extensive road connectivity and skilled workforce—to present the state as a cost-effective alternative for technology and manufacturing firms.
In pursuit of these goals, the Punjab government is already in active discussions with several key players. These include SML Mahindra (formerly SML Isuzu, acquired by Mahindra & Mahindra in August), EV component manufacturer Hero Cycles, and local commercial vehicle maker EVAge. This outreach signals a proactive approach to attracting immediate investment.
Intensifying Competition Among Indian States
Punjab's move places it squarely in a growing nationwide competition among states vying for a share of the booming EV market. States like Maharashtra, Tamil Nadu, Karnataka, and Haryana have already established attractive policies, drawing investments from EV makers, charging infrastructure companies, and spare parts manufacturers.
The competitive landscape is fierce. Karnataka's EV Policy 2025-2030 offers capital subsidies covering 20-25% of fixed asset costs for manufacturers. Maharashtra identifies EV manufacturing as a "thrust sector" and provides 20% fiscal incentives. Tamil Nadu's 2023 policy gives manufacturers a choice between a 100% SGST waiver, a turnover-linked subsidy, or a capital subsidy for large investments.
This race for investment is fueled by rapid growth in the sector. India saw over two million electric vehicles sold in 2025, up from approximately 1.9 million in 2024. However, industry experts caution that sustaining this momentum is critical. Kunal Mundra, CEO of EV financier Astranova Mobility, noted that while the country is on track for its 2030 adoption targets, uniform growth across the entire EV ecosystem—from manufacturing capacity, especially for larger vehicles like buses, to continued R&D for cost reduction—is essential for long-term success.
Punjab's forthcoming policy, with its headline-grabbing 125% incentive promise, represents a bold bid to capture a significant portion of this future growth, transforming its traditional manufacturing base into a hub for the vehicles of tomorrow.
