In a significant push to accelerate electric vehicle (EV) adoption and manufacturing, India has introduced a new policy that slashes import duties on EVs from 110% to just 15%. This move, under the ‘Scheme to Promote Manufacturing of Electric Passenger Cars in India’ (SPMEPCI), is designed to encourage global automakers to invest in the country’s EV ecosystem.
Key Highlights of the New EV Policy
The initiative, announced by the Ministry of Heavy Industries, offers a major incentive to foreign car manufacturers: reduced customs duties in exchange for a commitment to local production and investment.
Investment Conditions
To qualify for the lower 15% import tariff, automakers must:
- Invest a minimum of ₹4,150 crore (approx. $500 million) within three years.
- Begin local manufacturing operations by the third year.
- Note: Prior investments, land, and existing infrastructure are excluded from the investment total.
Import Benefits
- The reduced duty applies for five years.
- Up to 8,000 electric vehicles can be imported annually under this scheme, provided each unit costs at least $35,000 (around ₹30 lakh).
- Unused import quotas can roll over to the following year.
- The total government outlay is capped at ₹6,484 crore or the actual investment made—whichever is lower.
Performance Benchmarks
To continue receiving benefits, participating companies must meet specific targets:
- Generate ₹2,500 crore in turnover by year two,
- ₹5,000 crore by year four, and
- ₹7,500 crore by year five.
They must also achieve:
- At least 25% domestic value addition by year three, and
- 50% by year five.
Eligible investments may include R&D, plant and machinery, and EV charging infrastructure (up to 5% of the total investment). Land and construction directly tied to manufacturing can account for up to 10%.
Automaker Interest & Industry Impact
Heavy Industries Minister H.D. Kumaraswamy confirmed that major global players—Hyundai, Kia, Mercedes-Benz, Skoda, and Volkswagen—have shown strong interest in the scheme.
However, Tesla is not expected to join the manufacturing drive. Despite its much-anticipated 2025 entry into the Indian market, the American EV giant reportedly plans only to open showrooms and import vehicles—leaving them subject to the full 110% import duty.
“Tesla is not expected to invest in local production; they are likely to start with just showrooms,” said Kumaraswamy.
Eligibility Criteria
To apply under the SPMEPCI scheme, companies must meet these global thresholds:
- A minimum annual automotive turnover of ₹10,000 crore
- At least ₹3,000 crore in fixed assets
An online application portal is expected to launch soon, with approvals beginning August 2025.
Leave a Reply