Govt approves new EV policy to promote India as manufacturing hub for e-vehicles

New Delhi, Mar 15  With a view to strengthen Electric Vehicle eco system in the country, the Government has approved a scheme to promote India as a manufacturing destination so that e-vehicles (EV) with the latest technology can be manufactured in the country.
The policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers, an official statement said, adding that investment of Rs 4,150 crore has been set as minimum for availing benefits with no cap on maximum investment.
This will provide Indian consumers with access to latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude Oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment.
According to policy, the companies will have to set up manufacturing facilities in India within three years and start commercial production of e-vehicles.
Minimum Investment required is Rs 4,150 Crore (USD 500 Mn) with no limit on maximum Investment and the companies need to reach 50 per cent domestic value addition (DVA) within 5 years at the maximum.
In the Domestic value addition (DVA) during manufacturing, the policy stated that a localization level of 25 per cent by the 3rd year and 50 per cent by the 5th year will have to be achieved.
Companies setting up manufacturing facilities for EVs to be allowed limited imports of cars at lower custom duty. The customs duty of 15 per cent (as applicable to CKD units) would be applicable on vehicle of minimum CIF value of USD 35,000 and above for a total period of 5 years subject to the manufacturer setting up manufacturing facilities in India within a 3-year period.
The duty foregone on the total number of EV allowed for import would be limited to the investment made or Rs 6,484 Crore (equal to incentive under PLI scheme) whichever is lower. A maximum of 40,000 EVs at the rate of not more than 8,000 per year would be permissible if the investment is of USD 800 Mn or more.
The carryover of unutilized annual import limits would be permitted.
The Investment commitment made by the company will have to be backed up by a bank guarantee in lieu of the custom duty forgone, it said adding the Bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines.