Electric Car Boom Could Bring ₹7,500 Crore to India - Here's How

Written by:  Tabish Sultan

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EV Spotlight

After receiving input from different ministries the Ministry of Heavy Industries is ready to finalize its EV production policy. The policy seeks to increase local car production through Tesla and VinFast investments.

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Finalizing EV Manufacturing Guidelines

Under the scheme, companies can import EVs at a reduced 15% duty (vs. current 100%) for five years, provided they commit ₹4,150 crore in local manufacturing investments and meet localization targets.

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15% Duty Concession for Global Brands

After stakeholder feedback, the government plans to invite applications by mid-February 2025, signaling a phased rollout to ensure policy readiness.

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Mid-February 2025 Application Launch

Inspired by the PLI scheme, participants must achieve sales targets: The scheme includes sales value targets at ₹5,000 crore in Year 4 and ₹7,500 crore in Year 5 with penalties for non-compliance.

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Sales Value Targets Aligned with PLI

Companies investing ₹4,150 crore gain annual import quotas of 8,000 EVs (priced ≥$35,000) at 15% duty. Unused quotas can be carried forward to subsequent years.

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Investment & Import Quota Linkage

Up to 5% of the mandated ₹4,150 crore investment can be allocated to charging infrastructure development, addressing a critical barrier to EV adoption.

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5% Investment for Charging Infrastructure

Existing manufacturers can participate via brownfield investments but must establish new, dedicated EV production lines, ensuring no dilution of scheme goals.

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Brownfield Investment Flexibility 

Participants must achieve 25% domestic value addition (DVA) by Year 3 and 50% by Year 5, promoting India’s supply chain integration.

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Localization Mandates

Nissan, BMW, Mercedes, VinFast, Hyundai, Tata, and others have submitted suggestions. Notably, Tesla remains silent, showing no formal interest yet.

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Global OEM Feedback Incorporated

Existing Indian automakers like Mahindra and Maruti must meet the same investment and localization criteria as global entrants, preventing market distortion.

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Level Playing Field for Domestic OEMs

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Thanks for Reading

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