The Ministry of Heavy Industries has issued detailed guidelines for the Electric Car Manufacturing Scheme (EV manufacturing scheme). Based on the provisions laid down in it, experts say that it will be difficult for small automobile companies to apply under this scheme.

What is the EV Manufacturing Scheme

'Scheme to Promote Manufacturing of Electric Passenger Cars in India' (SPMEPCI) was announced on 15 March 2024. Under this scheme, the government has allowed the import of fully built cars (CBU) with a CIF (cost, insurance, and freight) value of at least $35000 at a concessional rate of 15%. This permission is for 5 years. The company can import 8000 vehicles a year at this concessional rate. If so many cars are not imported in any year, it can be carried over to the next year.

The condition is that the company will have to commit to investing at least Rs 4150 crore (about $ 500 million) in manufacturing in India within three years. There will be no maximum investment limit. In the first 3 years, the company will have to do at least 25% domestic value addition and in 5 years this limit will have to be taken to 50%. The maximum exemption limit will be Rs 6,484 crore or the investment amount, whichever is less.

What is special in the detailed guidelines

The government issued detailed guidelines for this scheme on Monday, June 2. The process of 120 days (or more) to apply will start soon. Companies can apply online. It has been clarified in the guidelines that only new plant, machinery, equipment, research and development, and to some extent building costs have been included in the investment. The price of land is not included in the investment.

The cost of charging infrastructure has been kept up to five percent of the total investment. Eligible candidates for application will be those whose global automobile revenue is at least Rs 10,000 crore and whose global fixed assets are at least Rs 3,000 crore. Experts say that due to these provisions, only already established companies will be able to qualify for application.

Only Indian companies like Tata, and Mahindra will qualify.

Ajay Srivastava, founder of think tank Global Trade Research Initiative (GTRI), says that the announcement of the scheme's guidelines is a positive step, but the application process has not started yet. It is expected to start soon. In reality, it may take 6 months or even more to announce the selected companies (Indian auto industry). Under this scheme, it will take more time for electric vehicles made in the country to come to the market. Currently, companies that get approval can import cars at only a 15% duty.

He said that India's top automobile companies like Tata Motors and Mahindra & Mahindra can qualify to apply under this scheme. But to take advantage of this, they will have to invest in a new plant. Other Indian companies such as Ola Electric, Ather Energy, Bajaj Auto, Wardwizard, and Eka Mobility may fail to comply with the strict eligibility standards.
This guideline has been issued at a time when the free trade agreement (FTA) between India and England has decided to reduce the import duty on premium electric vehicles from 100% to 10% in the next few years. FTAs ​​are also being negotiated with the US and the European Union. Therefore, companies should keep in mind not only the incentives given at the domestic level, but also the possibilities of other markets.

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