The Government of India has approved a scheme to promote India as a manufacturing destination so that e-vehicles with the latest technology can be manufactured in the country. The policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers. The policy includes incentives such as tax benefits, subsidies, and research funding for companies that invest in e-vehicle production and technology.
This will provide Indian consumers with access to the latest technology. It will boost the Make in India initiative. Additionally, it will strengthen the EV ecosystem by promoting healthy competition among EV players, leading to high volume of production, economies of scale, lower cost of production, reduced imports of crude oil, lower trade deficit, reduced air pollution, particularly in cities, and will have a positive impact on health and the environment.
The policy entails the following: –
- Minimum Investment required: Rs 4150 Cr (∼USD 500 Mn)
- No limit on maximum Investment
- The timeline for manufacturing is as follows: 3 years for setting up manufacturing facilities in India and starting commercial production of e-vehicles. The goal is to reach 50% domestic value addition (DVA) within 5 years at the maximum.
- Domestic value addition (DVA) during manufacturing: A localization level of 25% by the 3rd year and 50% by the 5th year will have to be achieved
- The customs duty of 15% (as applicable to CKD units) would be applicable for a period of 5 years
- Vehicle of CIF value of USD 35,000 or above will be permissible
- The total number of EV allowed for import hinges on the lesser value between total duty foregone or investment made. This is subject to a maximum of ₹6,484 Cr (equal to incentive under PLI scheme).
- Not more than 8,000 EVs per year would be permissible for import under this scheme. The carryover of unutilized annual import limits would be permitted.
- The company’s investment commitment necessitates a bank guarantee to support it, substituting for the forgone custom duty.
- The bank guarantee will be invoked if DVA and minimum investment criteria, as per scheme guidelines, are not achieved.
