The Ministry of Heavy Industries launched the scheme in March 2024 to promote EV manufacturing by offering a concessional import duty of 15% for global original equipment manufacturers (OEMs).
Under this policy, companies can import at least 8,000 electric cars annually at the reduced 15% duty rate instead of the standard 70%, provided they commit an investment of $500 million toward manufacturing in India. While the scheme itself has been notified, the guidelines are in the final stages and are expected to be issued soon, paving the way for the application process to commence between late March and early April 2025.
The initiative was primarily designed for global EV giants such as Tesla and VinFast. However, it remains to be seen whether Tesla will participate, as the company has not been actively engaging in stakeholder consultations in recent months.
Key investment and compliance criteria
According to sources, companies applying for the scheme will be allowed to allocate up to 5% of their committed investment toward charging infrastructure. Additionally, expenditure on design will include in-house engineering and research & development (R&D) on eligible products.
A crucial aspect of the scheme is the revenue requirement. Companies must achieve a minimum revenue of ₹5,000 crore by the fourth year and ₹7,500 crore by the fifth year of operations. Failure to meet these targets could result in penalties ranging from 1% to 3% of the revenue shortfall. To oversee the implementation and approval process, an inter-ministerial sanctioning committee will be formed.
A cost-effective opportunity for automakers
The scheme provides a significant cost advantage for companies opting to manufacture in India. The policy applies to electric cars with a cost, insurance, and freight (CIF) value of $35,000 (approximately ₹29 lakh). Without the scheme, these vehicles would be subject to a 70% import duty, increasing their price to approximately ₹53 lakh. However, under the concessional duty structure, the cost to the consumer would be reduced to around ₹35.92 lakh, making EVs more affordable and attractive in the Indian market.
While the government remains hopeful about Tesla’s participation, the scheme presents a compelling opportunity for various global EV manufacturers. The coming months will reveal whether Elon Musk’s company and other international automakers choose to capitalise on this initiative and make their entry into India’s growing EV market.
(Edited by : Ajay Vaishnav)
