New EV policy approved: The government has on Friday announced a new scheme for EVs with an aim to make India a manufacturing hub for electric vehicles. According to the Ministry of Commerce & Industry statement, the policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers.
This scheme aims to offer Indian consumers access to cutting-edge technology, while also promoting the ‘Make in India’ campaign.It will enhance the EV ecosystem by encouraging healthy competition among players, resulting in increased production volumes, economies of scale, and reduced production costs. Additionally, it will decrease crude oil imports, lower the trade deficit, mitigate air pollution in urban areas, and yield positive health and environmental outcomes, the Ministry of Commerce & Industry said.
Under the new policy, import duties on some electric vehicles will be lowered, provided the company commits to a minimum investment and a manufacturing facility in India within 3 years. The new policy for electric vehicles will help attract foreign investment from companies like Elon Musk’s Tesla.
The new EV policy includes the following provisions:
This scheme aims to offer Indian consumers access to cutting-edge technology, while also promoting the ‘Make in India’ campaign.It will enhance the EV ecosystem by encouraging healthy competition among players, resulting in increased production volumes, economies of scale, and reduced production costs. Additionally, it will decrease crude oil imports, lower the trade deficit, mitigate air pollution in urban areas, and yield positive health and environmental outcomes, the Ministry of Commerce & Industry said.
Under the new policy, import duties on some electric vehicles will be lowered, provided the company commits to a minimum investment and a manufacturing facility in India within 3 years. The new policy for electric vehicles will help attract foreign investment from companies like Elon Musk’s Tesla.
The new EV policy includes the following provisions:
- Minimum investment required: Rs 4150 crore which is approximately $500 million
- No maximum investment limit
- Manufacturing timeline: Establishing manufacturing facilities in India within 3 years, commencing commercial production of e-vehicles, and achieving 50% domestic value addition (DVA) within a maximum of 5 years.
- Domestic value addition (DVA) during manufacturing: Achieving a localization level of 25% by the 3rd year and 50% by the 5th year.
- Application of 15% customs duty (as applicable to CKD units) on vehicles with a minimum CIF value of $35,000 and above for a total period of 5 years, provided the manufacturer sets up manufacturing facilities in India within 3 years.
- Limitation of duty foregone on the total number of EVs allowed for import to the investment made or Rs 6484 crore (equivalent to incentive under PLI scheme), whichever is lower. A maximum of 40,000 EVs, at a rate of not more than 8,000 per year, would be permissible if the investment is $800 million or more. Carryover of unutilized annual import limits would be permitted.
- The company’s investment commitment must be supported by a bank guarantee in lieu of the customs duty forgone.
- Invocation of the bank guarantee in case of non-achievement of DVA and minimum investment criteria outlined in the scheme guidelines.