Centre launches new scheme to make India global hub for making electric cars

New Delhi, June 2 The government on Monday notified guidelines for its forward-looking scheme to enable fresh investments from global manufacturers in the electric cars segment and promote India as a global manufacturing hub for e-vehicles.

To encourage global manufacturers such as US tech giant Tesla to invest under the scheme, the approved applicants will be allowed to import completely built-in units (CBUs) of electric four-wheelers with a minimum CIF (cost insurance and freight value) of $35,000 at reduced customs duty of 15 per cent for a period of 5 years from the date that the application is approved. .

Approved applicants would be required to make a minimum investment of Rs 4,150 crore in line with the provisions of the scheme.

The maximum number of e-4Ws allowed to be imported at the reduced duty rate will be capped at 8,000 units per year. The carryover of unutilised annual import limits would be permitted.

According to the notification, the maximum number of EVs to be imported under this scheme will be such that the maximum duty foregone per applicant will be limited to Rs 6,484 crore, or the committed investment of the applicant of a minimum of Rs 4,150 crore, whichever is lower.

The Standard Operating Procedure (SOP) issued under the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component (PLI Auto Scheme) would be followed to assess the DVA of the eligible product as required under the scheme.

Certification of DVA of an eligible product manufactured in India by the approved applicant would be done by testing agencies approved by the Ministry of Heavy Industries.

Investment should be made for the domestic manufacturing of the eligible product. In case the investment under the scheme is made on a brownfield project, a clear physical demarcation with the existing manufacturing facilities should be made, the notification states.

Expenditure incurred on new plant, machinery, equipment and associated utilities, and engineering research and development (ER&D) would be eligible.

The expenditure incurred on land will not be considered. However, buildings of the main plant and utilities will be considered as part of the investment provided it does not exceed 10 per cent of the committed investment, the notification further states.

Expenditure incurred on charging infrastructure would be considered up to a maximum of 5 per cent of the committed investment, it explains.

The applicant’s commitment to set up manufacturing facilities, achievement of DVA, and compliance with conditions stipulated under the scheme shall be backed by a bank guarantee from a scheduled commercial bank in India equivalent to the total duty to be forgone, or Rs 4,150 crore, whichever is higher, during the scheme period. The bank guarantee should be valid at all times during the tenure of the scheme, the notification added.

The scheme shall help to attract investments from global EV manufacturers and promote India as a manufacturing destination for e-vehicles. The scheme will also help put India on the global map for manufacturing of EVs, generate employment and achieve the goal of 'Make in India', according to the official statement.

This landmark initiative is aligned with India’s national goals of achieving net zero by 2070, fostering sustainable mobility, driving economic growth, and reducing environmental impact. It is designed to firmly establish India as a premier global destination for automotive manufacturing and innovation, the statement added.

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