India has released final guidelines for a new scheme aimed at encouraging global automakers to manufacture electric cars locally, offering tariff incentives in exchange for substantial investments.
Under the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), automakers must commit a minimum investment of 41.50 billion rupees ($500 million) within three years of approval by the Ministry of Heavy Industries (MHI). The programme requires a minimum domestic value addition (DVA) of 25% within this period, rising to 50% in five years, subject to certification by an MHI-approved agency.
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The scheme covers both greenfield and brownfield investments, although the latter must clearly separate existing and upgraded facilities. Qualifying expenditures include plant, equipment, research and development, and charging infrastructure, though only up to 5% of investment in charging assets is eligible. Land costs are excluded from the calculation, but buildings used for production will be counted.
In return, qualifying automakers will be allowed to import a limited number of electric vehicles as Completely Built Units (CBUs) at a reduced customs duty of 15%, significantly lower than the standard rate of up to 110%. The concessional rate will be valid for five years, with an annual cap of 8,000 units per company. The total value of import duty waived must not exceed either the applicant’s committed investment or 64.84 billion rupees ($780 million), whichever is lower.
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Only global companies with at least 100 billion rupees ($1.2 billion) in group-wide automotive revenue and 30 billion rupees ($360 million) in global fixed assets are eligible to apply.
Although the scheme was initially seen as a move to attract Tesla, India’s Minister of Heavy Industries, H. D. Kumaraswamy, said the U.S. EV maker currently has no plans to build cars in India. “They are not interested in manufacturing in India,” he told reporters.
Other companies such as Mercedes-Benz, Skoda, Volkswagen, Hyundai, and Kia have expressed interest in participating. MHI will open the application window for 120 days, with the option to extend it until March 15, 2026. Applicants must pay a non-refundable fee of 500,000 rupees and provide a bank guarantee equal to the duty waived or 41.50 billion rupees, whichever is greater.
Source: pib.gov.in, reuters.com, deccanherald.com
