The Indian government is set to unveil detailed guidelines for the “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI) by the end of February paving the way for global automakers to invest and manufacture electric vehicles (EVs) in the country. The scheme announced on March 15, 2024 aims to attract foreign and domestic players to India’s burgeoning EV market, fostering innovation and reducing dependency on imports.
Key Highlights of the Scheme
- Investment and Domestic Value Addition Requirements:
Under the SPMEPCI, applicants are required to invest a minimum of Rs 4,150 crore and achieve a domestic value addition (DVA) of at least 25% by the third year and 50% by the fifth year. The guidelines will assess DVA based on various parameters, including expenditures on research and development (R&D) and EV charging infrastructure. - Reduced Import Duties:
To incentivize manufacturers, the policy proposes to reduce import duties on EVs priced above $35,000 (cost, insurance, and freight) to 15%, down from the current rates of 70% or 100%. This reduction will apply to manufacturers who meet the minimum investment and DVA requirements, making it easier for global automakers to enter the Indian market. - Focus on Local Manufacturing:
The scheme emphasizes local manufacturing and the development of robust supply chains, aiming to enhance India’s technological capabilities in the EV sector and reduce reliance on imports.
Stakeholder Consultations and Investor Interest
The Ministry of Heavy Industries has already engaged with global original equipment manufacturers (OEMs) through the Society of Indian Automobile Manufacturers (SIAM) to gauge investor interest. Stakeholder consultations were held in 2024 to refine the guidelines and address industry concerns.
A senior government official, speaking on the condition of anonymity, stated, “The scheme is there. We have to issue a notification and guidelines. By February-end, the government should be able to come out with the detailed procedures and clarifications. Once the guidelines are published, OEMs can start applying under the scheme. Even Tesla can apply.”
Tesla’s Interest in the Indian Market
Tesla, the global EV giant, has shown keen interest in entering the Indian market. CEO Elon Musk has repeatedly expressed his intentions on social media, and the company had planned a high-level visit to India in 2022 to explore entry prospects. However, the visit was canceled at the last minute as Tesla sought significant cuts in India’s import duties for fully built units (CBUs) before committing to local manufacturing.
With the upcoming guidelines, Tesla and other global automakers will have a clear pathway to invest in India’s EV ecosystem, aligning with the government’s vision to make the country a global hub for electric vehicle production and innovation.
Expected Impact of the Scheme
The SPMEPCI is expected to:
- Boost Foreign Investments: Attract global automakers to set up manufacturing units in India.
- Enhance Domestic Manufacturing: Strengthen India’s EV supply chain and reduce import dependency.
- Promote Innovation: Encourage R&D and technological advancements in the EV sector.
- Create Jobs: Generate employment opportunities across the EV value chain.
Conclusion
The upcoming guidelines for the SPMEPCI mark a significant step toward realizing India’s ambition of becoming a global leader in electric vehicle manufacturing. By offering reduced import duties and emphasizing local value addition, the scheme aims to create a conducive environment for both foreign and domestic players to invest in India’s EV ecosystem. With global automakers like Tesla showing interest, the policy could catalyze a transformative shift in the country’s automotive industry, driving sustainable growth and innovation.
As the government finalizes the guidelines, the industry eagerly awaits the formal launch of the scheme, which is expected to unlock new opportunities and position India as a key player in the global EV market
