New Delhi: In a move to make India as a manufacturing destination for electric vehicles or EVs in the country, the Centre on Friday approved the e-vehicle policy. The move of the government aims at paving the way for the big players like Elon Musk-led Tesla Inc to enter the country with its new EV scheme. As per the government, EV makers are required to make a minimum investment of Rs 4,150 crore ($500 million) with no cap on maximum investment, according to the government.
As the fast-growing EV market in India is catching the eyes of global players, India's electric vehicles market is expected to grow to one crore units in annual sales by 2030 and create five crore direct and indirect jobs, according to the Economic Survey 2022-23. However, the industry has estimated that the total EV sales in India witnessed at around 10 lakh units in 2022. In India, Tata Motors is the leading player in passenger electric vehicles with its EV portfolio comprising Nexon EV range, Tiago EV and Tigor EV.
Issuing an official statement, the ministry of commerce & industry said that the companies setting up manufacturing facilities for e-vehicles would be allowed to import a limited number of cars at lower customs duty. “The policy, however, seeks to promote India as a manufacturing destination for EVs and attract investment from reputed global EV manufacturers. The duty foregone on the total number of EVs allowed for import would be limited to the investment made or Rs 6,484 crore (equal to incentive under PLI scheme) whichever is lower,” it said.
As per the policy, a company will get three years for setting up manufacturing facilities in India and to start commercial production of e-vehicles, and reach 50 per cent domestic value addition (DVA) within five years at the maximum. “With regard to domestic value addition during manufacturing, it said, ‘a localisation level of 25 per cent (will have to be achieved) by the third year and 50 per cent by the fifth year,” it said.
The ministry further said that the investment commitment made by the company would have to be backed up by a bank guarantee in lieu of the custom duty forgone. “A maximum of 40,000 EVs at the rate of not more than 8,000 per year would be permissible if the investment is $800 million or more. The carryover of unutilised annual import limits would be permitted,” it said.
The statement further said that the bank guarantee would be invoked in case of non-achievement of domestic value addition or DVA and minimum investment criteria defined under the scheme guidelines. “The initiative will provide Indian consumers access to the latest technology, boost the Make-in-India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players, leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment,” it added.
On customs duty, the ministry also said that the duty of 15 per cent (as applicable to CKD units) would be applicable on vehicles of minimum CIF (cost, insurance, freight) value of $35,000 and above for a total period of 5 years, subject to the manufacturer setting up facilities in India within a three-year period. At present, cars imported as completely built units attract customs duty ranging from 60 per cent to 100 percent, depending on engine size and cost, insurance and freight value less or above $40,000.
