As India accelerates its shift to electric mobility, the government is actively crafting import and tariff rules to support domestic manufacturing while enabling access to critical inputs. The Government of India, via the Ministry of Heavy Industries (MHI), approved the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) on March 15, 2024.( Ministry of Heavy Industries). The scheme is designed to attract global electric vehicle (EV) makers to set up or expand their electric car manufacturing footprint in India
Key features of SPMEPCI
| Feature | Detail |
|---|---|
| Import Concession | Approved manufacturers can import Completely Built Units (CBUs) of electric 4-wheelers (e-4W), with minimum CIF value of USD 35,000, at a concessional customs duty of 15 % for 5 years. |
| Annual Cap & Carryover | Limit of 8,000 units per year under the concessional duty; unused import quota can be carried forward. |
| Minimum Investment | Applicants must commit to at least ₹4,150 crore investment in India within 3 years. |
| Domestic Value Addition (DVA) | 25 % local content requirement in 3 years, rising to 50 % in 5 years. |
| Eligible Expenditure | Investments in plant & machinery, R&D, utilities, buildings (within limits), and up to 5 % in charging infrastructure are eligible. Land costs are excluded. |
| Safeguards & Guarantees | Applicants must furnish a bank guarantee equal to the higher of ₹4,150 crore or the total duty foregone. |
| Eligibility Criteria | Applicants should have global automotive revenues of ₹10,000 crore and at least ₹3,000 crore in fixed assets. |
| Application Window | The application portal opened on June 24, 2025, and remains open until October 21, 2025 (120 days). |
Highlights
- Under this scheme, approved OEMs can import Completely Built Units (CBUs) of electric cars (e-4W) having minimum CIF value of USD 35,000 at a reduced customs duty of 15% (versus prevailing high duty rates) for 5 years from the date of approval. Press Information Bureau
- However, the total number of such imports is capped at 8,000 units per year per applicant, and any unused quota can be carried forward.
- Applicants must commit ₹4,150 crore investment in domestic EV manufacturing and comply with Domestic Value Addition (DVA) milestones — 25% by year 3 and 50% by year 5. Press Information Bureau. A bank guarantee (equal to either ₹4,150 crore or the foregone duty, whichever is higher) is required to ensure compliance.
- The department of revenue in the Ministry of Finance also released a related notification on March 15, 2024 aligning import duty provisions with SPMEPCI. Legality Simplified
These measures effectively allow premium EVs to enter India with a softer tariff, provided global automakers invest and localize production.
2. Import Duty Exemptions for Critical Inputs / Battery Materials
In the Union Budget 2025–26, the government proposed removal of customs duty on 35 items used in EV battery manufacturing (and 28 items for mobile phones) to accelerate domestic value chains. Reuters
The fiscal proposal also exempted basic customs duty on scrap, waste, and precursor materials of critical minerals (like cobalt powder, lithium-ion battery waste, lead, zinc) to reduce cost burdens on battery firms.
By excluding these critical inputs from import duty, the government seeks to reduce supply bottlenecks and lower the effective cost of battery modules and cell manufacturing in India. Press Information Bureau
3. Penalties, Safeguards & Enforcement
The SPMEPCI guidelines specify penalties if revenue or localization criteria are not met. For example:
- A shortfall in revenue targets may attract 1% to 3% penalties, depending on how far off the target is.
- The bank guarantee may be invoked to recover benefits if obligations are breached.
- Only components manufactured by approved applicants and verified through accredited agencies will count toward value addition. Press Information Bureau
4. Gaps & Policy Coverage for Two-Wheelers and Subsystems
While SPMEPCI primarily covers electric passenger cars, equivalent clarity in directives around electric two-wheelers (e-2W), their modules, or subsystems (motors, controllers, battery packs) is still evolving. Some of those critical parts may benefit indirectly from the import duty exemptions for battery materials.
Also, existing Automotive / EV component PLI (Production Linked Incentive) schemes may influence how imports of modules or parts are regulated, though explicit import duty reductions for them are not fully public yet.
