Centre unveils ambitious scheme to boost EV manufacturing in India
According to the sources, the new EV policy allows companies to import a limited number of cars at reduced customs duty, provided they commit to investing at around ₹4150 crore ($500 million) and setting up manufacturing facilities in India within three years.
The Centre approved on Friday, March 15, an electric vehicle (EV) policy in a bid to attract major global players such as US-based Tesla to set up manufacturing units in India.
Under the EV policy, companies that set up plants for manufacturing EVs with a minimum investment of ₹4,150 crore will be allowed limited import of cars at lower customs duty.
They can set up manufacturing facilities in India in three years and attain a localisation level of 50% by the fifth year. There will be no upper investment limit.
The policy allows companies to import e-vehicles at a reduced customs duty of 15% for five years, applicable to Completely Knocked Down (CKD) units. The vehicles should have a Cost, Insurance, and Freight (CIF) value of $35,000 or above.
This marks a significant reduction from the current import tax of 70% or 100%, depending on the value of the car. This move could potentially bolster Tesla’s market entry plans.
RC Bhargava, Chairman of Maruti Suzuki, in an exclusive conversation with CNBC-TV18, said "This is a policy designed to bring in new technology into India. Because the policy is for high cost cars and the upper end of the market, I do not expect any impact on domestic automobile manufacturers."
Also Read: India’s Electric Mobility Promotion Scheme 2024 sees a four-month, ₹500 crore boost for EVs
The total number of EVs allowed for import will be determined by the total duty foregone or investment made, whichever is lower, subject to a maximum of ₹6,484 crore (equal to the incentive under the PLI scheme).
Not more than 8,000 EVs per year would be permissible for import under this scheme, with the carryover of unutilised annual import limits permitted.
Companies’ investment commitments will have to be backed up by a bank guarantee instead of the customs duty forgone. The bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines.
First Published: Mar 15, 2024 2:08 PM IST
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