Center gives green signal to new EV policy to promote India as manufacturing hub for e-vehicles

 

New Delhi :India on Friday unveiled a new EV (Electric Vehicle) policy that will provide incentives to foreign EV makers like US-based Tesla and Vietnamese carmaker VinFast to enter India’s emerging electric car market.

In a gazette notification, the Center said it will allow automakers to import vehicles priced at $35,000 or more at 15% lower import duty every year compared to 70% if they commit to invest at least $500 million in India. Will allow importing 8,000 EVs. In the next three years.

They will also have to start local manufacturing and ensure 50% domestic value addition (DVA) in vehicles manufactured here by the end of that period, which will have to be increased to 50% at the end of five years. The scheme will be operated by the Ministry of Heavy Industries (MHI).

Mint first reported last November that EV manufacturers looking to enter India were planning to introduce a policy for vehicles in the $25,000-$35,000 range.

However, local OEMs Tata Motors and Mahindra & Mahindra have lobbied the government to raise the price range to $35,000 and above to protect their investments and competitiveness.

People with knowledge of the matter said both OEMs have aggressive plans to launch ground-up premium EVs in the same price segment in India.

While Tesla was negotiating a duty cut for the $25,000 affordable EV that it plans to develop for markets like India, it will now bring its Model 3 to India, which sells for around $40,000 globally. Sells in dollars and will work in this direction. It is localizing its operations to kick-start its entry plans in India, the people cited above said on condition of anonymity.

The move, just a day ahead of the expected announcement of the Model Code of Conduct for the upcoming general elections, is being seen as a nifty balancing act by the government that will make India easier for business while managing not to alienate the domestic industry. Establishes it as an open destination for.

The government will also ask for bank guarantees from car manufacturers equivalent to the reduction in import duty on vehicles and will refund them only if they meet all the criteria set under the scheme in five years.

“This move seems appropriate for Tesla’s entry into India. The Model 3 and Model Wanted to do. Name should be given, said.

“However, VinFast will have to identify the right models to bring to India as its global portfolio has models that are either below the $35,000 price point or in the luxury range, which may not be viable for the dealer distribution network in India. Are. ,” He added.

Others aware of the government’s plans said the scheme will not apply to existing OEMs such as Hyundai, Kia, BYD or MG Motor India or European OEMs Mercedes-Benz and BMW unless they bring in fresh investment of at least $500 million. do not do. Over the next three years, in assembly operations, or in setting up a battery or cell manufacturing facility or in setting up charging infrastructure.

Detailed guidelines for the scheme have not been released yet. To be eligible under the scheme, the applying company must also meet the minimum global turnover requirement.

“Domestic automakers will not be adversely affected due to the higher price point cut-off. At a cap of 8,000 cars per year, only early adopters and affluent buyers will buy these cars. Even with lower subsidies, a $35,000 EV will cost somewhere north of 40 lakh at the retail level, where the market is anyway very small,” another senior executive said on condition of anonymity.

“However, this move is going to send a strong signal of confidence across the ecosystem, and the entry of OEMs like Tesla will also bring greater competitiveness to the industry,” he said.

A Mahindra & Mahindra spokesperson said: “The recently announced EV policy for new entrants strengthens the Make in India momentum with the requirements of bank guarantee, minimum investment commitment and local value addition. Our born electric SUV with cutting-edge technology is on track to be launched in January 2025. Our products will speak for themselves.”

On the new EV passenger vehicle manufacturing plan, Vinod Agarwal, Chairman, SIAM, said: “A holistic approach has been adopted by the government in the best interest of the country. The Indian automobile industry and SIAM members will embrace this new policy and remain committed to bringing new, innovative and ambitious products and work towards developing a strong EV ecosystem in India.”

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