The Government of India has greenlit a pioneering scheme aimed at positioning the country as a premier manufacturing hub for cutting-edge e-vehicles. This strategic move seeks to entice investments from esteemed global electric vehicle (EV) manufacturers, thereby revolutionizing the automotive landscape in India.
The policy initiative is poised to revolutionize the Indian automotive market, providing consumers with access to state-of-the-art technology while invigorating the Make in India initiative. By fostering healthy competition among EV players, the scheme is expected to drive a surge in production volumes, achieve economies of scale, and substantially lower production costs.
Moreover, it is projected to curtail crude oil imports, mitigate the trade deficit, and notably reduce air pollution levels, particularly in urban areas, thereby delivering profound health and environmental benefits.
Key highlights of the policy include:
- Minimum Investment Requirement: INR 4150 Crore (approximately USD 500 Million), with no maximum limit.
- Manufacturing Timeline: Companies are mandated to establish manufacturing facilities within 3 years in India, commence commercial production of e-vehicles, and achieve a domestic value addition (DVA) of 50% within 5 years.
- Domestic Value Addition (DVA): Companies must achieve a localization level of 25% by the 3rd year and 50% by the 5th year of manufacturing.
- Customs Duty Benefits: A 15% customs duty (as applicable to Completely Knocked Down units) would be applicable for a duration of 5 years.
- Import Allowance: E-vehicles with a CIF value of USD 35,000 or above will be permissible. The total number of EVs allowed for import will be determined by the total duty foregone or investment made, subject to a maximum cap of INR 6,484 Crore.
- Import Limit: Not more than 8,000 EVs per year would be permissible for import under this scheme, with provisions for carryover of unutilized annual import limits.
- Bank Guarantee: Investment commitments must be backed by a bank guarantee, which will be invoked in case of non-achievement of DVA and minimum investment criteria.
This landmark scheme marks a significant stride towards fostering indigenous manufacturing capabilities, driving technological innovation, and catalyzing sustainable development in the automotive sector. With a robust policy framework in place, India is poised to emerge as a global powerhouse in the realm of electric mobility.
Quotes from EV Industry Experts:
“We are thrilled about the new scheme by the government of India as it is yet another significant step towards sustainable mobility in India. This support will catalyse our efforts, enabling many OEMs like us to innovate, scale and accelerate the adoption of electric two-wheelers across India. It’s a win for the economy, environment, industry players and every Indian consumer.”
Mr. Hari Kiran, Co-Founder and COO, eBikeGo
Oben Electric welcomes the Union Government’s approval of the E-Vehicle policy, recognizing it as a remarkable step towards fostering a robust ecosystem for electric vehicles (EVs) in India. This policy aligns with the sector’s vision of advancing sustainable mobility and also resonates with the larger goal of “Make in India” and “Atmanirbhar Bharat”. This will provide Indian consumers access to cutting-edge technology and also propel the growth of domestic manufacturing capabilities. With a clear roadmap for minimum investment requirements and timelines for setting up manufacturing facilities, accompanied by incentives such as lower custom duties on imports, this policy framework lays a strong foundation for the growth of the EV sector. Moreover, the focus on achieving significant levels of domestic value addition within specified timeframes will drive localization and skill development, thereby creating employment opportunities and reducing reliance on imports. Overall, these initiatives are poised to accelerate the transition towards sustainable transportation, mitigate air pollution, and contribute towards building a greener and self-reliant India.
Ms. Madhumita Agrawal, Founder & CEO of Oben Electric
The recent announcement of the Electric Mobility Promotion scheme represents a positive step towards continuing support to accelerate the adoption of electric vehicles (EVs). This timely initiative comes as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme draws to a close by 31st March 2024, providing a crucial 4-month transition period for the industry to stabilize.
Going by the long-term objective of self-sustenance of the EV industry, the Government has been gradually reducing the FAME subsidy. The last reduction was in May 2023, and the balance funds available were distributed for the vehicles sold till March 2024. The current FAME subsidy is around ₹22,500 per two-wheeler until 31st March 2024. From 1st April 2024, the Electric Mobility Promotion scheme kicks in with a further reduced subsidy of Rs. 10,000 per two-wheeler till July end. This sends a clear signal that, while the FAME scheme cannot be extended, the Government is here to ensure a smooth transition to a self-sustainable business model by the OEMs. This move reflects a pragmatic approach towards gradually weaning the industry off heavy subsidies, allowing it to sustain itself over the long run.
While the subsidy reduction may seem challenging in the short term, it ultimately serves to prevent any sudden shocks to the industry and encourages manufacturers to innovate and offer better products and value propositions to justify the price consumers are paying. By fostering a more sustainable and self-reliant ecosystem, the EV industry can chart a course towards long-term viability and resilience.
In essence, this transition signifies the progress of the EV market, where government support also evolves from subsidies to strategic incentives aimed at fostering innovation and charging infrastructure development. It underscores a commitment to sustainable mobility solutions while also ensuring the industry’s ability to thrive independently in the years to come.
Raptee Energy- Dinesh Arjun – Co-founder and CEO
The recent announcement of the new EV policy by the Indian government marks a pivotal moment in the country’s journey towards sustainable transportation. We wholeheartedly applaud this progressive step, recognising it as a golden opportunity to position India as a global manufacturing hub, not only for domestic but also for international players in the electric vehicle industry.
This initiative not only aligns with the government’s ambitious ‘Make in India’ program but also promises to generate additional employment opportunities across the nation. By creating a favourable environment for EV manufacturing, the policy is poised to energise the domestic component sector, particularly benefiting battery manufacturers, and strengthen the financing ecosystem, thereby making electric vehicles more accessible to the masses.
Of notable significance is the provision for limited exports of EVs at reduced custom duty rates, which not only encourages local manufacturing but also attracts global players into the Indian EV market. This surge of international expertise and technology is set to enhance the quality standards of EVs available in India.
Furthermore, the new EV policy will help India become a global manufacturer of EVs, giving local companies a better chance against global competitors, especially in the markets for EVs two-wheelers, and three-wheelers. With support such as subsidies and the right infrastructure, Indian manufacturers can improve their products to compete worldwide. This will also help Indian manufacturers to sell high-quality products with the latest technological advancements at competitive prices globally. This move not only aids India’s economy but also encourages innovation and enhances Indian products worldwide, ensuring a steady supply of top-notch products to both OEMs and end consumers.
In essence, the new EV policy signals a significant shift towards a greener, more sustainable future for India’s transportation landscape while simultaneously fostering economic growth and technological advancement.”
Mr. Pratik Kamdar, CEO & Co-Founder, Neuron Energy
