Centre’s Nod to EV Policy to Boost Manufacturing, Localisation in India: All You Need to Know

To boost India’s standing as a manufacturing hub for electric vehicles, the Centre has given the nod to a comprehensive scheme designed to attract investments from global manufacturers. The policy underscores India’s commitment to advancing domestic electric vehicle (EV) technology.

Here are the key facets of the policy:

• Minimum Investment: Companies entering the EV manufacturing sector must commit to a minimum investment of Rs 4,150 crore, with no upper limit on investment.
• Manufacturing Timeline: A strict timeline of three years has been mandated for establishing manufacturing facilities in India and initiating commercial EV production. Additionally, companies must achieve a 50 per cent domestic value addition (DVA) in five years.
• Customs Duty Incentives: Companies that set up manufacturing facilities will be eligible for limited imports of vehicles at a reduced customs duty rate. A customs duty of 15 per cent (applicable to CKD units) will be levied on vehicles with a minimum CIF (cost, insurance and freight) value of $35,000 for five years, contingent upon manufacturers establishing production facilities in three years.
• Bank Guarantee Requirement: Investment commitments made by companies must be backed by a bank guarantee, which will be invoked in cases of non-compliance with the DVA and minimum investment criteria outlined in the scheme guidelines.
• Cap on Duty Forgiveness: The total duty forgone on imported EVs will be limited to the investment made or Rs 6,484 crore (equivalent to the incentive under the PLI scheme), whichever is lower. Companies investing $800 million or more can import a maximum of 40,000 EVs at the rate of no more than 8,000 per year.
• Localisation Targets: Companies are required to achieve a localisation level of 25 per cent by the third year and 50 per cent by the fifth year of operation.

According to Raman Bhatia, founder and managing director at Servotech Power Systems Ltd, the new policy is a win-win for the rapidly expanding Indian economy and a major step forward in achieving the country’s e-mobility goals. He said with a focus on boosting domestic manufacturing and encouraging competition as well as growth, this policy will provide ample opportunities for increasing the adoption of EVs, fulfilling the vision of ‘Make In India’.

“It will pave the way for large-scale investments from global EV giants like Tesla, making India a global manufacturing hub for these vehicles and providing much-needed impetus for local players to enhance their manufacturing capacities and adapt high-tech EV technologies. It signifies a transformative shift towards cleaner, greener mobility options, ensuring a brighter, more sustainable future for future generations,” he added.

Mayank Bindal, founder and CEO of Snap E Cabs, hailed the policy as a pivotal step towards accelerating EV adoption in India. “The newly announced policy is a potential game-changer in terms of hastening the adoption of EVs across India. This commitment to large investments shows that the government is committed to creating an EV system that is strong and thriving,” he said.

Hyder Khan, CEO of Godawari Electric Motors, welcomed the policy’s clarity but stressed on the importance of continued government support, particularly regarding subsidies.

“We applaud the government’s decision to announce the EMPS scheme and recognising its pivotal role in fostering the EV ecosystem,” he said, adding, “it is important for the subsidies to continue as it will reduce Chinese dependency and let the Indian EV ecosystem flourish.”

VG Anil, CEO of ARENQ, expressed appreciation for India’s steadfast commitment to bolstering the growth of the EV sector through the new policy. “India shows its unwavering commitment to bolster the growth of the electric vehicle sector through the new policy, which does not have a maximum investment limit and has a minimum investment requirement of Rs 4,150 crore. By encouraging investments and stressing on the importance of indigenous production, it bolsters employment opportunities as well as economic development,” he said.

To boost India’s standing as a manufacturing hub for electric vehicles, the Centre has given the nod to a comprehensive scheme designed to attract investments from global manufacturers. The policy underscores India’s commitment to advancing domestic electric vehicle (EV) technology.

Here are the key facets of the policy:

• Minimum Investment: Companies entering the EV manufacturing sector must commit to a minimum investment of Rs 4,150 crore, with no upper limit on investment.
• Manufacturing Timeline: A strict timeline of three years has been mandated for establishing manufacturing facilities in India and initiating commercial EV production. Additionally, companies must achieve a 50 per cent domestic value addition (DVA) in five years.
• Customs Duty Incentives: Companies that set up manufacturing facilities will be eligible for limited imports of vehicles at a reduced customs duty rate. A customs duty of 15 per cent (applicable to CKD units) will be levied on vehicles with a minimum CIF (cost, insurance and freight) value of $35,000 for five years, contingent upon manufacturers establishing production facilities in three years.
• Bank Guarantee Requirement: Investment commitments made by companies must be backed by a bank guarantee, which will be invoked in cases of non-compliance with the DVA and minimum investment criteria outlined in the scheme guidelines.
• Cap on Duty Forgiveness: The total duty forgone on imported EVs will be limited to the investment made or Rs 6,484 crore (equivalent to the incentive under the PLI scheme), whichever is lower. Companies investing $800 million or more can import a maximum of 40,000 EVs at the rate of no more than 8,000 per year.
• Localisation Targets: Companies are required to achieve a localisation level of 25 per cent by the third year and 50 per cent by the fifth year of operation.

According to Raman Bhatia, founder and managing director at Servotech Power Systems Ltd, the new policy is a win-win for the rapidly expanding Indian economy and a major step forward in achieving the country’s e-mobility goals. He said with a focus on boosting domestic manufacturing and encouraging competition as well as growth, this policy will provide ample opportunities for increasing the adoption of EVs, fulfilling the vision of ‘Make In India’.

“It will pave the way for large-scale investments from global EV giants like Tesla, making India a global manufacturing hub for these vehicles and providing much-needed impetus for local players to enhance their manufacturing capacities and adapt high-tech EV technologies. It signifies a transformative shift towards cleaner, greener mobility options, ensuring a brighter, more sustainable future for future generations,” he added.

Mayank Bindal, founder and CEO of Snap E Cabs, hailed the policy as a pivotal step towards accelerating EV adoption in India. “The newly announced policy is a potential game-changer in terms of hastening the adoption of EVs across India. This commitment to large investments shows that the government is committed to creating an EV system that is strong and thriving,” he said.

Hyder Khan, CEO of Godawari Electric Motors, welcomed the policy’s clarity but stressed on the importance of continued government support, particularly regarding subsidies.

“We applaud the government’s decision to announce the EMPS scheme and recognising its pivotal role in fostering the EV ecosystem,” he said, adding, “it is important for the subsidies to continue as it will reduce Chinese dependency and let the Indian EV ecosystem flourish.”

VG Anil, CEO of ARENQ, expressed appreciation for India’s steadfast commitment to bolstering the growth of the EV sector through the new policy. “India shows its unwavering commitment to bolster the growth of the electric vehicle sector through the new policy, which does not have a maximum investment limit and has a minimum investment requirement of Rs 4,150 crore. By encouraging investments and stressing on the importance of indigenous production, it bolsters employment opportunities as well as economic development,” he said.