MHI notifies the scheme to promote electric passenger car manufacturing in India

The Union Government has approved a scheme aimed at promoting India as a manufacturing hub for e-4Ws, attracting investments from global EV manufacturers. The policy mandates a minimum investment of INR 4150 Cr, along with a timeline of 3 years for setting up manufacturing facilities and commencing commercial production of EVs. Within 5 years, companies are required to achieve a domestic value addition (DVA) of 50%.

This initiative is expected to provide Indian consumers access to advanced technology and support the Make in India initiative. It aims to strengthen the EV ecosystem by fostering competition among players, leading to increased production and reduced costs. Additionally, it seeks to decrease crude oil imports, lower the trade deficit, mitigate air pollution, particularly in cities, and positively impact health and the environment.

Key features of the policy include:

• The minimum investment requirement is INR 4150 Cr with no maximum limit.

• There is a three-year timeline for establishing manufacturing facilities in India and commencing commercial production of e-vehicles.

• Gradual increase in domestic value addition, reaching 25% by the third year and 50% by the fifth year.

• Electric cars (with a minimum Cost, Insurance & Freight value of USD 35,000) can initially be imported at a reduced duty of 15% for a period of 5 years. 

• Limited import of EVs at a reduced customs duty rate, with the duty foregone capped at the investment made or INR 6484 Cr, whichever is lower.

• Provision for a maximum of 40,000 EV imports over a five-year period, max 8,000 a year with carryover of unused annual import limits allowed.

• Requirement for a bank guarantee to support the investment commitment, which will be invoked in case of failure to meet the domestic value addition and minimum investment criteria outlined in the scheme guidelines.

Link to the details of Scheme to Promote the Manufacturing of Electric Passenger Cars in India as issued by the Ministry of Heavy Industries, Government of India.

Also read: MHI launches Electric Mobility Promotion Scheme 2024 with an outlay of INR 500 crore