India Gears Up for Global Electric Vehicle Revolution with New Policy

The Ministry of Heavy Industries will soon release draft guidelines for its new EV policy aimed at attracting global automakers like Tesla to set up manufacturing in India. Companies must invest $500 million in fresh investments to be eligible for incentives, with the policy set to transform India's EV landscape.

PTI | New Delhi | Updated: 20-05-2024 20:17 IST | Created: 20-05-2024 20:17 IST
India Gears Up for Global Electric Vehicle Revolution with New Policy
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The Ministry of Heavy Industries will hold a second round of meeting with stakeholders in a ''month or two'' to issue draft guidelines for the new electric vehicle (EV) policy that has been framed to attract global automakers like Tesla to set up manufacturing operations in India, a senior official said on Monday.

Automakers wishing to avail of incentives under the policy will have to invest afresh as per the new norms, and old investments will not be considered, the official said.

This has been told to Vietnam's electric carmaker Vinfast, which in February this year had said it would invest USD 500 million (Rs 4,000 crore) in Tamil Nadu over a period of five years, according to the official. In a significant move aimed at revolutionising the EV landscape in India, the government approved the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) on March 15, 2024. The first stakeholders' meeting was held in April in which an advisor representing Tesla -- The Asia Group (TAG) -- had also attended.

''We have got a lot of representations. We have studied them so maybe in a month or two we may have the second consultative meeting. The task before us is to issue guidelines,'' the official explained.

Stating that the government wants to issue them through a consultative process, the official said, ''We will make the draft guidelines and will circulate those amongst the possible applicants and again call a consultative meeting.'' Asked whether Tesla will be invited for the second consultative meeting, he said, ''We will invite everyone, whoever wants to come is welcome''.

He said eligible firms under the SPMEPCI can import at a reduced duty, provided they invest USD 500 million in greenfield investment.

''On March 15, the scheme was notified and it was written that within 120 days or more the government will open the window and publish its guidelines. ''Therefore, on July 31 or later when the window will be opened it will remain open for 120 days or more. During the window opening period, companies can apply. So, companies will apply and we will evaluate their applications,'' a senior official said.

The official said Vinfast asked whether their old investments will count and the government has said it would not be counted.

''They said they will stop more investments in that case until the scheme comes out. We said okay,'' the official said, adding that there are no commitments and only the actual investment will be counted under the scheme.

He explained that it is a five-year scheme so the window can be opened again in the future.

Under the policy, the official said when the automobile manufacturers apply for the scheme, the government will give them an eligibility certificate.

''Whatever is written in PLI auto scheme criteria will be followed in the scheme. Investment means establishment of plant and machinery, establishing charging infrastructure and assets,'' the official said. He clarified that the assets need not be within the premises of the company's plant but they should be owned by the company.

The official further said royalty will not qualify as investment under the scheme.

''Royalty on import of technology will not qualify as part of investment. So, Bosch had an issue with that,'' the official said, on discussions during the first consultations.

As per the new policy, companies that would set up manufacturing facilities for EV passenger cars with a minimum investment of Rs 4,150 crore (USD 500 million) in India will be allowed to import a limited number of cars at lower customs/import duty of 15 per cent on vehicles costing USD 35,000 and above for five years from the date of issuance of the approval letter by the government. The manufacturing facilities will have to be made operational within three years from the date of issuance of approval letter by the Ministry of Heavy Industries and achieve minimum domestic value addition (DVA) of 25 per cent within the same period and a minimum DVA of 50 per cent within five years from the date of issuance of the approval letter by MHI.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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