New EV policy | Government Approves New Scheme to Promote Electric Vehicle Manufacturing

Key Highlights:

• Mandates companies to invest a minimum of Rs 4,150 crore within India.
• Provides a three-year timeframe for companies to establish local manufacturing units for EVs.
• Requires companies to source at least 25% of components locally.
• Supports market entry plans of companies like Tesla.
• Allows companies meeting criteria to import up to 8,000 EVs annually.
• Reduces import duty to 15% for vehicles costing $35,000 and above.
• India currently imposes import taxes ranging from 70% to 100% on imported cars based on their value.

On March 15, the Centre announced the approval of a new scheme aimed at positioning India as a premier manufacturing destination for electric vehicles (EVs), incorporating the latest technology within the country. The Ministry of Commerce & Industry emphasised that the policy aims to attract investments from renowned global EV manufacturers.

Expected Impacts and Industry Responses

The government anticipates that this initiative will facilitate access to cutting-edge technology, strengthen the EV ecosystem, and further bolster the Make in India initiative. The duty waiver on imported EVs will be capped at either the annual PLI incentive of Rs 6,484 crore or the entity's investment, whichever is lower.

Sunjay Kapur, Chairman of Sona Comstar & Deputy Chair of CII Northern Region, hailed the move as a significant step towards establishing India as an EV manufacturing hub and attracting global investment.

Uday Narang, Founder of Omega Seiki Mobility, praised the provision for reduced customs duty on imported EVs, stating that it encourages companies to invest in local manufacturing, thus balancing domestic production with international competitiveness.

Ayush Lohia, CEO of Lohia Auto, expressed optimism regarding the surge in demand for three-wheelers and two-wheelers driven by the new scheme. He believes this will not only benefit businesses but also stimulate innovation to meet market demands.

Industry Outlook

A spokesperson from Mahindra emphasized that the new EV policy for newcomers strengthens the Make in India initiative and is poised to accelerate the development of the EV ecosystem in the country. Mahindra's spokesperson stated that their Born Electric SUVs are scheduled for launch in January 2025, equipped with cutting-edge technology, thereby contributing to the advancement of the EV sector in India.

New EV Policy Analysis

The government's approval of the new scheme to promote electric vehicle (EV) manufacturing will make India a global leader in the EV sector. By mandating a minimum investment requirement and incentivizing local manufacturing, the policy seeks to attract renowned global EV manufacturers and encourage the development of a robust domestic ecosystem.

The provision for reduced import duties on EVs, coupled with the requirement for local sourcing of components, not only supports the entry of international players like Tesla but also fosters the growth of indigenous EV manufacturing capabilities. This initiative aligns with the broader Make in India agenda, aiming to boost domestic production, create employment opportunities, and enhance technological innovation in the EV sector.

Carbike360 Says

Overall, the government's proactive stance on promoting EV manufacturing reflects its commitment to driving sustainable economic growth and fostering a conducive environment for the transition towards cleaner mobility solutions.