Examine the regulatory and fiscal hurdles that keep vehicle retrofitment marginal in India, and suggest measures to bring it into the mainstream.

Vehicle retrofitment means converting an existing petrol or diesel vehicle to run as a hybrid or electric vehicle by fitting a certified kit. Since 2019 it has been allowed under Rule 115D of the Central Motor Vehicles Rules (CMVR), 1989 [1]. It remains marginal because both regulation and subsidies favour buying a new EV over converting an old one.

Regulatory hurdles

• Approval is model-specific. Under AIS-123, a kit is approved for one vehicle model and can be extended only to closely similar models [2]. India's large and varied old fleet therefore needs separate, costly testing for each model.
• The kit maker controls installation. Only installers authorised by the kit manufacturer may fit kits [3]. A local mechanic cannot become a retrofitter independently.
• Eligibility is limited. Only vehicles made on or after 1 January 1990 can be converted to pure electric [1], and hybrid kits are allowed only on BS-II or later vehicles [3].
• Few kits have reached the market. Raipur's RetroKit for auto-rickshaws cleared ARAI testing only with TDB-DST funding [4].
• Retrofitment sits outside scrappage policy. Scrappage benefits come through the Certificate of Deposit (CoD). Retrofitted vehicles have no equivalent [5].

Fiscal hurdles

• There is no demand incentive. FAME II gave no allowance for retrofitment [6]. PM E-DRIVE (₹10,900 crore) gives e-vouchers only for buying new EVs [7].
• Tax treatment is unequal. New EVs pay 5% GST [8]. Kits are taxed as ordinary auto parts, which widens the cost gap.

Measures to mainstream retrofitment

• GST Council: charge the 5% EV rate on AIS-123-certified kits. This would also push buyers away from uncertified kits [8].
• MoRTH: approve kits for whole vehicle platforms, not single models, and publish a list of approved kits and installers [2].
• Ministry of Heavy Industries: set aside part of EV scheme funds for converting buses, trucks and three-wheelers. In these vehicles the chassis is worth keeping [7].
• States: issue a "retrofit certificate" with road-tax concessions, modelled on NITI Aayog's proposal for uniform CoD concessions [5].
• Skilling: train and certify neighbourhood mechanics through partnerships with kit makers [3].

What holds retrofitment back is model-by-model approval and incentives that reward only new purchases, more than any limit of technology. If tax, subsidy and certification rules are aligned, starting with commercial fleets, retrofitment can become a decentralised, small-business-led partner to scrappage. That would support India's circular economy, its Net Zero 2070 goal and SDG 12 (responsible consumption and production).