Government Eases Import Restrictions to Boost Electric Vehicle Manufacturing

India's government has relaxed localization rules under the PM E-DRIVE Scheme, allowing electric vehicle manufacturers to import traction motors with rare-earth magnets until August 31. This change alleviates component shortages, extending manufacturing deadlines and reducing dependence on China for critical materials.

In a significant policy shift, the Indian government has relaxed localization requirements under the Rs 10,900 crore PM E-DRIVE Scheme. This move provides much-needed relief to manufacturers of electric trucks and buses by permitting the import of traction motors with rare-earth magnets until August 31.

The Ministry of Heavy Industries, through notifications dated March 13, deferred the deadline for local production of these traction motors, a decision aimed at addressing the component shortages troubling manufacturers. It's the second time this deadline has been extended, with the new cutoff set for September 2026, giving manufacturers more time to adapt.

While attempting to minimize reliance on China for rare-earth materials—essential for industries such as EVs, electronics, aerospace, and green energy—the government is working on securing consistent supply chains. An additional Rs 7,280 crore scheme aims to promote domestic production of these critical inputs.

(With inputs from agencies.)