Government approves e-vehicle policy to boost manufacturing in India

In a bid to position India as a global manufacturing hub for electric vehicles (EVs), the Government of India has greenlit a new policy aimed at attracting investments in the e-vehicle sector. Under this scheme, companies setting up manufacturing facilities for e-vehicles will enjoy certain benefits, including limited imports of cars at lower customs duty rates.

The move is part of the government’s broader efforts to promote the Make in India initiative and strengthen the EV ecosystem in the country. By encouraging reputed global EV manufacturers to invest in India, the policy aims to provide Indian consumers with access to the latest technology in electric vehicles.

According to the new policy guidelines:

• Minimum Investment Requirement: Companies will be required to invest a minimum of Rs 4150 crore (approximately USD 500 million) in setting up manufacturing facilities in India.
• Manufacturing Timeline: Manufacturers must set up manufacturing facilities within three years and achieve a localisation level of 50% by the fifth year.
• Customs Duty Benefits: A customs duty of 15% (applicable to CKD units) will be applicable for a period of five years.
• Import Allowance: Companies will be permitted to import EVs with a CIF value of USD 35,000 or above, subject to certain conditions.
• Annual Import Limit: Not more than 8,000 EVs per year will be allowed for import under this scheme, with provisions for carrying over unutilised annual import limits.
• Bank Guarantee Requirement: Investment commitments made by companies must be backed by a bank guarantee, which will be invoked in case of non-achievement of domestic value addition (DVA) and minimum investment criteria.

The implementation of this policy is expected to have several positive outcomes, including reducing the country’s reliance on imported crude oil, lowering the trade deficit, and mitigating air pollution, particularly in urban areas. Additionally, the policy is anticipated to foster healthy competition among EV players, leading to higher volumes of production, economies of scale, and lower production costs.

Overall, the approval of the E-Vehicle Policy marks a significant step forward in India’s journey towards becoming a global leader in electric vehicle manufacturing and promoting a cleaner, greener future for transportation.