India is making strides in becoming a pivotal player in electric vehicle (EV) manufacturing with the introduction of a new policy designed to attract substantial investments.
Under this policy, companies eyeing India’s promising EV market can invest a minimum of Rs 4,150 Cr with no maximum limit. To qualify, companies must establish manufacturing plants within the country and commence commercial production of EVs within three years.
Investors are enticed with attractive incentives to establish manufacturing units. They can import a limited number of vehicles at a reduced customs duty of 15% for vehicles valued at USD 35,000, provided they meet specified conditions.
This benefit extends for five years if the company establishes its manufacturing unit on time and achieves localization levels of 25% by the third year and 50% by the fifth year.
This move has garnered significant interest, especially as Tesla, the US EV giant, has been in discussions with the Indian government for years regarding a reduction in import duties.
The government’s statement underscores the potential advantages of this policy, including granting Indian consumers access to cutting-edge technology, supporting the Make in India initiative, and fostering a competitive EV market.
This competition is anticipated to result in increased production volumes, economies of scale, reduced production costs, and numerous environmental and health benefits.
The government has also set a cap on the duty benefits tied to the investment amount of Rs 6,484 crore, or whichever is lower. Companies investing USD 800 million or more can import up to 40,000 EVs over five years, with provisions for carrying over unused annual import limits.
To ensure commitment to the investment, companies must provide a bank guarantee equal to the customs duty forgone. This guarantee will be invoked if the minimum investment criteria are not met. Furthermore, selected applicants must maintain their initial shareholding levels without dilution throughout the scheme’s duration.
This initiative marks a significant stride toward establishing India as a hub for EV manufacturing, leveraging foreign investment to drive technological advancement, reduce dependency on crude oil, and make positive contributions to environmental and public health.
