New Delhi: India on Friday approved the electric vehicles (EV) policy mandating a minimum investment of INR 4,150 crore or around USD 500 million. and allowing investors three years to set up local manufacturing for EVs with domestic value addition (DVA) of 25% by the third year and 50% by the fifth year.
“The policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers,” the commerce and industry ministry said in a statement.
The customs duty of 15% (as applicable to CKD units) would be applicable on vehicle of minimum CIF value of USD 35,000 and above for five years subject to the manufacturer setting up manufacturing facilities in India within a 3-year period.
The duty foregone on the total number of EV allowed for import would be limited to the investment made or INR 6,484 crore (equal to incentive under PLI scheme) whichever is lower.
A maximum of 40,000 EVs at the rate of not more than 8,000 per year would be permissible if the investment is of USD 800 million or more, according to the policy. The carryover of unutilized annual import limits would be permitted.
Moreover, the investment commitment made by the company will have to be backed up by a bank guarantee in lieu of the custom duty forgone. The bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines
This will provide Indian consumers with access to latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment, the ministry said.
