New Delhi

The Union Government has approved a scheme to promote India as a manufacturing destination for electric vehicles (EV) with the latest technology. The policy is designed to attract investments in the EV space by reputed global manufacturers.

This will provide Indian consumers with access to latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment.

Minimum investment of Rs 4,150 crore (approximately $ 500 million) is required by the EV manufacturer with no cap on maximum investment. There will be a 3-year timeline for setting up manufacturing facilities in India, and to start commercial production of electric vehicles, and reach 50 per cent domestic value addition (DVA) within 5 years at the maximum.

Timeline for manufacturing: 3 years for setting up manufacturing facilities in India, and to start commercial production of e- vehicles. A localisation level, i.e. domestic value addition (DVA), of 25 per cent by the third year and 50 per cent by the fifth year will have to be achieved.

The customs duty of 15 per cent, as applicable to completely knockdown (CKD) units, will be applicable on vehicle of minimum CIF value of $ 35,000 and above for a total period of 5 years subject to the manufacturer setting up manufacturing facilities in India within a 3-year period. 

The duty foregone on the total number of EV allowed for import would be limited to the investment made or Rs 6484 crore (equal to incentive under PLI scheme) whichever is lower. A maximum of 40,000 EVs at the rate of not more than 8,000 per year would be permissible if the investment is of $ 800 million or more. The carryover of unutilised annual import limits would be permitted.

The investment commitment made by the company will have to be backed up by a bank guarantee in lieu of the custom duty forgone. The Bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines.

According to Raman Bhatia, Founder & Managing Director, Servotech Power Systems Ltd, the new electric vehicle policy will make India a global powerhouse for EV manufacturing. “It is a boon for India’s booming economy and acts as a major push forward in the nation’s aspirations for clean transportation. Keeping a strong focus on prioritizing domestic manufacturing and encouraging competition and growth, this policy will provide enough chances and harbour enough space to facilitate increasing the adoption of EVs across the nation and aligns with the Make in India initiative promoting local production and job creation. This policy acts as a gateway for large-scale investments from global EV giants like Tesla, making India an EV manufacturing hub globally and providing the much-needed impetus for the local players to enhance their manufacturing capacities and adapt high-tech EV technologies. This healthy rivalry will drive innovation, reduce production costs, and ultimately benefit Indian consumers with a broader range of high-quality, affordable EVs,” he added.