India has officially approved its EV policy, which mandates a minimum investment of Rs 4,150 crore, roughly equivalent to $500 million. Under this policy, investors will be granted a three-year timeframe to establish local manufacturing facilities for EVs, with targets set for DVA at 25 per cent by the third year and 50 per cent by the fifth year.
This move is aimed at accelerating the adoption of electric vehicles in India and boosting the local manufacturing ecosystem for sustainable mobility solutions. The Ministry of Commerce and Industry has announced a policy with the objective of enticing investments from well-known international electric vehicle (EV) producers.
Under this policy, a 15% customs duty will be levied on completely knocked down (CKD) units of vehicles with a minimum Cost, Insurance, and Freight (CIF) value of US$35,000. This duty will be applicable for a period of five years, contingent upon the condition that the manufacturer establishes manufacturing facilities in India within three years.
The exemption of duty on the aggregate quantity of imported electric vehicles (EVs) will be limited to either the investment value or Rs 6,484 crore, whichever is lesser. According to the policy, a maximum of 40,000 EVs, with an annual limit not exceeding 8,000, will be allowed for import if the investment exceeds US$800 million.
Moreover, there is a provision to carry forward any unused annual import quotas. Furthermore, it is imperative for companies to obtain a bank guarantee as a means of backing their investment commitment. This guarantee would be invoked in the event that the company fails to meet the specified criteria, including the DVA and minimum investment requirements as outlined in the scheme guidelines.
This initiative is designed to provide Indian consumers with more than just access to advanced technology. It also seeks to enhance the Make in India campaign, promoting domestic manufacturing and technological progress within the nation. By doing so, it aims to empower the country’s economy and drive innovation in various sectors.
Additionally, it aims to stimulate competition among electric vehicle (EV) manufacturers, leading to increased production capacities, the realization of economies of scale, reduced production costs, diminished dependence on crude oil imports, a narrower trade deficit, the mitigation of air pollution (particularly in urban areas), and positive impacts on public health and the environment, as emphasized by the ministry.
