India’s electric vehicle sector is poised for a significant boost thanks to the recently unveiled EV policy, according to a report by ICRA Limited, a leading credit rating agency. The policy’s focus on electric two-wheelers (e4w) and mandatory localisation is expected to catalyse growth in the medium term and empower domestic component manufacturers.
ICRA’s report terms the new policy “progressive” as it aims to attract substantial investments, create jobs, and incentivize e4w manufacturers while setting clear roadmaps for increasing domestic value addition. This emphasis on localisation is seen as a critical step towards building a robust domestic supply chain and a self-reliant EV ecosystem within India.
The policy offers a significant incentive for manufacturers willing to set up production facilities in India. Eligible companies can benefit from a reduced import duty of 15% on completely built-up (CBU) electric two-wheelers for a limited period. However, to avail this benefit, companies must meet certain conditions, including a minimum investment threshold of Rs. 4,150 crore (approximately $500 million), operationalisation of the plant within three years, and achieving domestic value addition (DVA) of 25% within three years and 50% within five years of approval.
Analysts believe this policy could have a ripple effect, accelerating the adoption of electric cars (ePCs) as well. With a focus on building a strong domestic EV ecosystem, India has the potential to emerge as a future hub for premium electric passenger vehicles, the report suggests.
