India Unveils Scheme to Create E-Vehicle Manufacturing Hub

By Editor


In a bid to position India as a premier destination for manufacturing electric vehicles (EVs) equipped with cutting-edge technology, the Union Government has approved a pioneering scheme. This initiative aims to attract investments from global EV manufacturers, fostering a robust ecosystem within the nation’s burgeoning EV industry.

The scheme is poised to revolutionize the landscape, granting Indian consumers access to latest EV technology while bolstering the Make in India campaign. It is anticipated to create competition among EV players, resulting in heightened production volumes, economies of scale, and reduced production costs.

Moreover, the scheme is expected to curb crude oil imports, mitigate trade deficits, combat urban air pollution, and deliver significant health and environmental benefits.

Outlined under the policy are the following key provisions:

Minimum Investment Requirement: Rs 4150 crore (approximately USD 500 million), with no upper limit on investment.

Manufacturing Timeline: Companies must establish manufacturing facilities within three years in India, commence commercial production of EVs, and achieve a minimum domestic value addition (DVA) of 50 percent within five years.

Domestic Value Addition (DVA): Manufacturers are mandated to achieve localization levels of 25 percent by the third year and 50 percent by the fifth year of production.

Customs Duty Waiver: A 15 percent customs duty, applicable to completely knocked down (CKD) units, will be imposed on vehicles with a minimum CIF value of USD 35,000 for a period of five years, contingent upon the establishment of manufacturing facilities within three years.

Duty Exemption Ceiling: Duty foregone on imported EVs will be capped at the investment made or Rs 6484 crore (equivalent to incentives under the PLI scheme), whichever is lower. A maximum of 40,000 EVs, not exceeding 8,000 annually, will be permitted for import if the investment exceeds USD 800 million. Unused import quotas may be carried forward.

Bank Guarantee Requirement: Companies must furnish a bank guarantee equivalent to the customs duty forgone to secure their investment commitments. This guarantee will be invoked in the event of non-compliance with DVA and minimum investment criteria stipulated in the scheme guidelines.

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