The Ministry of Heavy Industries (MHI), on March 15, 2024, introduced the Scheme to Promote Manufacturing of Electric Passenger Cars in India (Scheme).
The Scheme aims to encourage manufacturing of electric 4-wheeler vehicles (EVs) in India and is designed to draw investment from international EV producers, positioning India as a prime location for EV production. It aims to globally recognize India in the EV sector, create jobs, and support the ‘Make in India’ initiative.
Following are some of the key highlights of the Scheme:
■ An entity or its group can qualify and receive benefits under the Scheme if:
| Eligibility Criteria | Auto OEM |
|
Global Group[1] Revenue (from automotive manufacturing), based on the latest audited annual financial statements at the time of application |
At least INR 10,000 crore |
| Investment, based on the latest audited annual financial statements at the time of application | Global Investment of Company or its Group*
Company(ies) in fixed assets (gross block) of at least INR 3,000 crore |
| Minimum Investment Commitment in India during a 3 years’ window | INR 4,150 crore |
| Maximum Investment Commitment in India during a 3 years’ window | No Limit |
| Domestic value addition criteria during manufacturing | 25% to be achieved within 3 years from date of issuance of approval letter
50% to be achieved within 5 years from date of issuance of approval letter |
■ Facilities under this Scheme shall be available only after the following conditions are met:
-
- Issuance of Approval Letter to the applicant;
- Submission of prescribed bank guarantee of INR 4,150 crore; and
- If the duty foregone is more than INR 4,150 crore, then, submission of additional bank guarantee to the extent of the additional duty benefit sought.
■ The companies whose credentials have been considered for selection of applicant under this Scheme shall not be allowed to dilute their shareholding (direct or indirect) in the applicant during the tenure of the Scheme.
■ The approved applicant will be allowed to import CBUs of e-4W manufactured by them at a reduced customs duty of 15% subject to the conditions as per this Scheme.
■ EV passenger cars (e-4W) can initially be imported with a minimum CIF value of USD 35,000, at a duty rate of 15% for a period of 5 years from the date of issuance of approval letter by MHI. The maximum number of e-4W allowed to be imported at the aforesaid reduced duty rate shall be capped at 8,000 nos. per year. The carryover of unutilized annual import limits would be permitted.
■ The maximum number of EVs to be imported under this Scheme shall be such that the total duty foregone will be limited to the lower of the following: i. The maximum duty foregone per applicant (limited to INR 6,484 crore), or ii. committed investment of the applicant (in Rs. crore)
Applications are invited to be submitted through the online portal along with the prescribed supporting documents and information, during the window for receiving applications. All the applications will be finalized within 120 days from the date of submission of applications or receipt of clarification sought, if any.
The Scheme supplements existing policies aimed at fostering the growth of the electric vehicle market, including PLI schemes for automobiles and automotive components, advanced chemistry cell initiatives, consumer subsidies under the FAME scheme, and state-specific policies.
[1] Group Company(ies) shall mean two or more enterprises which, directly or indirectly, are in a position to Exercise twenty-six percent or more of voting rights in the other enterprise.