On Friday, the Centre approved the E-Vehicle (EV) policy to promote India as a manufacturing destination for EVs. A minimum investment of ₹4,150 crore is required, and there is no maximum investment cap.
The policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers.
This will provide Indian consumers with access to the latest technology, boost the ‘Make in India’ initiative, and 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, Ministry of Commerce & Industry said in a statement.
Domestic value addition
Apart from a minimum investment requirement of ₹4,150 crore ($500 million), the policy entails three years for setting up manufacturing facilities in India, starting commercial production of EVs, and reaching 50 per cent domestic value addition (DVA) within five years at the maximum.
Also, DVA during manufacturing would include a localisation level of 25 per cent by the third year and 50 per cent by the fifth year will have to be achieved, it said.
“The customs duty of 15 per cent (as applicable to completely knocked down or CKD units) would be applicable on vehicle of minimum Cost, Insurance and Freight (CIF) value of $35,000 and above for a total period of five years subject to the manufacturer setting up manufacturing facilities in India within a three-year period,” the Ministry of Commerce said.
It said the duty foregone on the total number of EVs allowed for import would be limited to the investment made or ₹6,484 crore (equal to incentive under the PLI scheme), whichever is lower.
It further said that a maximum of 40,000 EVs at 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.
“The investment commitment made by the company will have to be backed up by a bank guarantee in lieu of the custom duty forgone. The Bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines,” it added.