The Indian government is on the brink of unveiling comprehensive guidelines for its ambitious electric vehicle (EV) policy, marking a significant step towards promoting the adoption and manufacturing of EVs in the country.
Sources familiar with the matter have indicated that the guidelines are slated to be released in the next three to four weeks, paving the way for the policy’s full implementation in the ensuing months. A key aspect under consideration is the inclusion of brownfield investments alongside greenfield ventures in the policy framework. Manufacturers have advocated for this inclusion, aiming to leverage existing facilities for EV production and thereby benefit under the policy. However, discussions on this front are ongoing, with stakeholders deliberating the feasibility and implications of such a move.
The EV policy, sanctioned by the government on March 15, underscores India’s aspiration to emerge as a prominent manufacturing hub for electric vehicles. Central to the policy is the provision allowing companies establishing EV manufacturing facilities to import vehicles at reduced customs duty rates. To avail of these benefits, companies must establish manufacturing units within three years and achieve a localisation level of 50% within five years. While deliberations continue on the precise contours of the policy, it has been emphasised that the benefits linked to brownfield investments may pose certain challenges. Theoretically, granting incentives based on brownfield projects could conflict with the policy’s objective of stimulating fresh investments and fostering indigenous manufacturing capabilities.
The policy mandates a minimum investment threshold of ₹4,150 crore for companies initiating EV manufacturing operations in India, with no upper limit on investment. Additionally, to incentivise localisation efforts, a domestic valuation addition (DVA) requirement of 25% in the first three years and 50% by the fifth year has been stipulated. Moreover, the government has sanctioned a customs duty rate of 15%, applicable for five years, to facilitate the import of completely knocked down (CKD) units, thereby incentivising localisation efforts. Industry experts anticipate that this policy framework would predominantly benefit companies with CKD units, including established players such as Mercedes-Benz, BMW Group, and Audi, alongside newcomers like VinFast and Tesla. As the government finalises the EV policy guidelines, stakeholders are keenly observing its potential to catalyse investments, drive innovation, and propel India towards a greener automotive future. This strategic overhaul of the EV landscape underscores the government’s unwavering commitment to fostering sustainable mobility solutions and accelerating the nation’s transition to electric mobility.
