In a significant setback to India’s ambitions of becoming a global electric vehicle (EV) manufacturing hub the government’s marquee incentive scheme for attracting major international automakers has received zero applications.
Minister of State for Heavy Industries Bhupathiraju Srinivasa Varma no applications confirmed in Parliament that the Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI) found no takers before its October 21 deadline.
Why Did Global Giants Say No?
Despite extensive government outreach to embassies and global headquarters, automakers cited three major roadblocks:
- Rare Earth Magnet Curbs: Restrictions on importing these crucial components for electric motors.
- Ongoing India-EU FTA Talks: Uncertainty around future trade terms with a key economic bloc.
- Stringent Investment & Timelines: The scheme’s high investment threshold (₹4,150 crore) and tight deadlines for achieving Domestic Value Addition (DVA) targets were seen as challenging.
Manufacturers indicated they would reconsider once the India-European Union Free Trade Agreement is finalized, suggesting they are waiting for clearer, more stable trade rules.
What Was the Offer on the Table?
Approved in March 2023, the SPMEPCI was designed as a balancing act:
- The Carrot: Allowed qualified global automakers to import premium electric cars (priced over $35,000) at a reduced customs duty of 15% (vs. 70-100% normally) for up to 8,000 vehicles per year.
- The Stick: Required them to set up a manufacturing plant in India within 3 years and progressively increase local content to 50% within 5 years.
The scheme targeted only the largest global players, requiring a minimum annual automotive revenue of ₹10,000 crore.
What Happens Now?
The government has stated it is not currently considering reopening the application window or adjusting the scheme’s terms. This leaves a major pillar of India’s EV strategy in limbo, even as domestic players like Tata Motors and Mahindra advance their own electric plans.
The lack of interest underscores the complexities of attracting global capital in a competitive landscape, where manufacturers weigh incentives against supply chain constraints and long-term regulatory certainty.
