India Launches New EV Incentive Scheme To Attract Global Manufacturers

New Delhi, Jun 3 (KNN) The Indian government announced on Monday the implementation of new guidelines for an electric vehicle manufacturing incentive scheme designed to attract global investment and establish the country as a major hub for electric vehicle production.

Under the new framework, approved manufacturers will be permitted to import completely built electric four-wheelers with a minimum cost, insurance, and freight value of USD 35,000 at a reduced customs duty rate of 15 percent.

This preferential duty rate will remain in effect for five years from the date of application approval, with imports capped at 8,000 units annually per applicant. Unused annual import quotas may be carried forward to subsequent years.

Participation in the scheme requires a minimum investment commitment of Rs 4,150 crore from approved applicants.

The government has established a maximum duty concession limit of Rs 6,484 crore per applicant, though the actual benefit will be determined by whichever amount is lower between this ceiling and the applicant's committed investment.

The scheme incorporates existing evaluation procedures from the Production Linked Incentive Scheme for Automobile and Auto Components to assess domestic value addition requirements.

Certification of domestic value addition for products manufactured in India will be conducted by testing agencies approved by the Ministry of Heavy Industries.

Investment criteria specify that funds must be directed toward domestic manufacturing of eligible products.

For brownfield projects, clear physical separation from existing manufacturing facilities is mandatory. Eligible expenditures include new plant equipment, machinery, associated utilities, and engineering research and development activities.

Certain limitations apply to qualifying investments. Land acquisition costs are excluded from consideration, while building expenses for main plants and utilities are capped at 10 percent of the total committed investment. Additionally, charging infrastructure development costs may account for up to 5 percent of the committed investment.

Financial guarantees represent a key component of the scheme's structure. Applicants must provide bank guarantees from scheduled commercial banks in India equivalent to either the total duty to be foregone or Rs 4,150 crore, whichever amount is higher.

These guarantees must remain valid throughout the entire scheme duration.

Government officials stated that the initiative aims to attract investment from global electric vehicle manufacturers while positioning India as a preferred manufacturing destination for electric vehicles.

The scheme is expected to generate employment opportunities and advance the Make in India initiative.

The program aligns with India's broader environmental and economic objectives, including the national commitment to achieve net-zero emissions by 2070.

Officials described the initiative as designed to promote sustainable mobility, drive economic growth, reduce environmental impact, and establish India as a leading global centre for automotive manufacturing and innovation.

(KNN Bureau)