New Delhi, Mar 26 (KNN) India has unveiled a major new scheme to promote manufacturing of electric passenger vehicles (EVs) in the country.

On Friday, the government issued notifications exempting social welfare surcharge and reducing basic customs duty to 15 per cent on imports of EVs under certain conditions.

Global companies with a minimum Rs 10,000 crore auto turnover or Rs 3,000 crore investment can import up to 8,000 EVs priced above USD 35,000 per year for 5 years at 15 per cent duty.

However, they must invest a minimum of Rs 4,150 crore in an Indian EV manufacturing plant within 3 years.

Additionally, they are required to achieve 25 per cent domestic value addition within 3 years and 50 per cent within 5 years.

The duty benefit is capped at Rs 6,484 crore or the committed investment, whichever is the lower amount.

Furthermore, companies must provide a bank guarantee against duty foregone.

The scheme aims to attract foreign direct investment for EV manufacturing as India targets growth in this emerging sector.

It complements existing policies like Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) and Production Linked Incentive (PLI) schemes for EVs and batteries.

While supporting new EV investment, the latest policy limits imports of premium EVs to prevent market disruption.

Domestic automakers believe allowing limited high-end imports won't significantly impact their business.

However, Indian automakers want high duty protection on imported passenger vehicles over USD 40,000 despite lacklustre export performance.

Experts suggest improving competitiveness could benefit the industry more than import duties.

The government will notify complete procedural guidelines within 120 days.

It expects a positive response given projected growth in the global EV market.

(KNN Bureau)