Central Government Approves New E-Vehicle Policy Focused On Domestic Manufacturing

Central Government Approves New E-Vehicle Policy Focusing Domestic Manufacturing

Centre today approved a policy regarding investments for manufacturing e-vehicles in India. The Central government said that the scheme is meant to promote India as a manufacturing destination so that e-vehicles 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.

Centre also noted, “This will provide Indian consumers with access to the latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among E-Vehicle 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.”

To be eligible to enter the EV segment under the newly tweaked rules, the company must have a minimum investment of Rs 4150 crore. Under the scheme, 3 years for setting up manufacturing facilities in India, starting commercial production of e-vehicles, and reaching 50% domestic value addition (DVA) within 5 years at the maximum will be provided.

Further, domestic value addition (DVA) during manufacturing will have to be achieved with a localisation level of 25% by the 3rd year, and 50% by the 5th year will have to be achieved. Companies that set up manufacturing facilities for e-vehicles will be allowed limited imports of cars at lower customs duty.

The customs duty of 15 percent (as applicable to CKD units) would be applicable for 5 years while Vehicles of CIF value of USD 35,000 or above will be permissible. The total number of EVs allowed for import would be determined by the total duty foregone or investment made, whichever is lower, subject to a maximum of Rs 6,484 crore.

Along with this, not more than 8,000 EVs per year would be permissible for import under this scheme. 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. The Bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines.