New EV policy incentivises foreign manufacturers with tax relief and import duty reductions.
The Indian government has greenlit a transformative policy aimed at propelling India into the forefront of electric vehicle (EV) manufacturing. According to the Ministry of Commerce and Industry, the policy is strategically designed to allure global EV manufacturers, fostering investments and technological advancements within the Indian EV sector.
Under this scheme, EV manufacturers committing to a minimum investment of INR 4,150 crore within three years to initiate local manufacturing will benefit from import tax concessions. Notably, there’s no upper limit on investment. Additionally, manufacturers are mandated to import a maximum of 8,000 electric vehicles annually, sourcing at least 35 percent of components locally, and achieving 50 percent Domestic Value Addition (DVA) within five years.
Importantly, the policy offers a reduced import duty of 15 percent for EVs priced below $35,000, compared to existing rates of 70 to 100 percent. Companies must provide a bank guarantee to support their investment commitments, with repercussions for non-compliance.
This initiative holds the potential to attract major players like Tesla, which has long expressed interest in the Indian market. However, previous attempts were stymied by policy differences. With this progressive move, India aims to accelerate its transition towards sustainable mobility while fostering economic growth and technological innovation in the EV sector.
Sunjay Kapur, Chairman, Sona Comstar and Deputy Chair, CII Northern Region, sheds light on the new EV policy and shares, “The approval of the new E-Vehicle policy marks a pivotal moment in our nation’s mobility landscape. This progressive step not only solidifies India’s position as a manufacturing hub for EVs but also fosters a conducive environment for global players to invest in our burgeoning market. With a minimum investment threshold and a clear roadmap for domestic value addition, this policy underscores the government’s commitment to nurturing a robust EV ecosystem. It heralds a new era of innovation and accessibility to cutting-edge technology and amplifies the ‘Make in India’ initiative. By incentivising local manufacturing and fostering healthy competition, this policy will not only accelerate the adoption of EVs but also bolster economic growth by way of reducing our reliance on imported crude oil and mitigating environmental impact, particularly in urban areas. I congratulate the government and welcome this forward-thinking policy which propels India’s journey towards a greener and sustainable future.”
