The Indian government is set to open the application window for the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) by August, potentially marking a significant milestone for the country’s electric vehicle (EV) sector.
This development is anticipated to pave the way for major players, including Tesla, to establish a presence in India. The SPMEPCI, approved on March 15, outlines a 120-day period post-approval for the application window to commence, placing the deadline around July 31. A senior government official indicated that the window would open in August or, at the latest, September. This period will remain open for at least four to five months, allowing companies ample time to apply. “Companies can start applying then and it will remain open for at least four-five months (or even more, that is up to the Ministry of Heavy Industries),” the official said.
To qualify for the scheme, companies must commit a minimum investment of $500 million to establish a new manufacturing plant in India. They are required to achieve a minimum domestic value addition of 25% by the third year and 50% by the fifth year of operations. This initiative is designed to bolster local manufacturing and contribute to the ‘Make in India’ campaign.
The scheme also allows for the importation of completely built units (CBUs) of electric cars with a cost, insurance, and freight (CIF) value of $35,000 or more, eligible for a reduced custom duty of 15% over a five-year period, down from the current 100%. Each company can import up to 8,000 EVs annually under this provision, contingent upon the amount of duty foregone or investment made. Existing companies are also eligible to apply for subsidies under the scheme, provided they meet the $500 million investment threshold and establish a new EV production facility. This move is expected to generate employment and further the objectives of the ‘Make in India’ initiative.
Last month, a consultative meeting was convened, attended by representatives from major automotive companies such as Tesla, Vinfast, Maruti Suzuki India, Tata Motors, and Mahindra & Mahindra. This meeting underscores the significant interest and potential impact of the SPMEPCI on the Indian automotive landscape. The government has also included a provision in the policy to reopen the application window within two to three years if necessary, ensuring flexibility and continued encouragement for investment in the EV sector. This strategic move aims to attract substantial investment and accelerate the adoption of electric vehicles in India, aligning with the global shift towards sustainable and eco-friendly transportation solutions.
As the application window opens, the Indian market is poised for a transformative phase in its automotive industry, with the potential to become a significant hub for electric vehicle manufacturing and innovation.
