NEWS – The Union Government has approved an E-Vehicle policy to promote India as a manufacturing hub for electric vehicles (EVs), with the aim of attracting investments from global EV manufacturers

HIGHLIGHTS

Investment Requirements:

• Minimum investment of Rs 4150 crore (approximately USD 500 million) is required with no cap on maximum investment.

Timeline for Manufacturing:

• Companies have a 3-year timeline to set up manufacturing facilities in India and commence commercial production of EVs.
• A minimum of 50% domestic value addition (DVA) must be reached within 5 years.

Domestic Value Addition (DVA):

• Localization levels of 25% by the 3rd year and 50% by the 5th year of manufacturing must be achieved.
• This promotes the development of local manufacturing capabilities and reduces dependency on imports.

Customs Duty Incentives:

• Limited imports of cars at lower custom duty (15% applicable to CKD units) are allowed for EV manufacturers.
• The duty foregone on imported EVs is limited to the investment made or ₹6484 crore, whichever is lower.

Import Limits and Bank Guarantee:

• A maximum of 40,000 EVs (not exceeding 8,000 per year) can be imported under the scheme, depending on the investment amount.
• Companies must provide a bank guarantee to support their investment commitment, which will be invoked in case of non-achievement of DVA and minimum investment criteria.

Objectives and Benefits:

• Promotes India as a manufacturing destination for advanced EV technology.
• Boosts the Make in India initiative, strengthens the EV ecosystem, reduces imports of crude oil, lowers trade deficit, and mitigates air pollution.
• Encourages healthy competition among EV players, leading to higher production volumes, economies of scale, and lower production costs.