In a strategic move to position India as a premier destination for manufacturing cutting-edge electric vehicles (EVs), the Union Government has approved the new policy. The scheme is designed to entice reputed global EV manufacturers to invest in the country’s burgeoning EV market.
The policy aims to provide Indian consumers with access to the latest EV technologies while bolstering the Make in India initiative. By fostering healthy competition among EV players, the scheme is set to drive higher production volumes, economies of scale, and lower production costs. Additionally, it is expected to significantly reduce imports of crude oil, lessen the trade deficit, and combat air pollution, particularly in urban areas, leading to positive impacts on public health and the environment.
Outlined in the policy are the following key points:
- Minimum Investment Requirement: Firms are required to invest a minimum of Rs 4150 crore (approximately USD 500 million) with no maximum limit specified.
- Manufacturing Timeline: Companies must set up manufacturing facilities in India within 3 years and commence commercial production of EVs. A target of achieving 50% domestic value addition (DVA) within 5 years is set.
- Domestic Value Addition (DVA): Manufacturers are expected to achieve a localization level of 25% by the 3rd year and 50% by the 5th year of manufacturing.
- Customs Duty Incentive: A 15% customs duty (applicable to CKD units) would be applicable on vehicles with a minimum CIF value of USD 35,000 and above for a 5-year period, contingent upon the manufacturer setting up facilities in India within 3 years.
- Import Limits: The duty foregone on the total number of EVs allowed for import would be limited to the investment made or ₹6484 crore (equivalent to the incentive under PLI scheme), whichever is lower. A maximum of 40,000 EVs at a rate of no more than 8,000 per year would be permissible for investments of USD 800 million or more.
- Bank Guarantee Requirement: Companies must back their investment commitment with a bank guarantee in lieu of the customs duty forgone. This guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria outlined in the scheme guidelines.
This policy is a significant step towards not only boosting the EV manufacturing sector in India but also aligning with global trends towards sustainable transportation. It is poised to attract substantial investments, foster technology transfer, and drive the nation towards a greener and more self-reliant future in the realm of electric vehicles.
