India has a new policy to boost local EV manufacturing. It slashes import duties on electric cars to 15% for foreign companies that invest a minimum of ₹4,150 crore and commit to increasing domestic production. This aims to attract global players, though concerns remain about technology sharing and competition for domestic firms.
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The Ministry of Heavy Industries, has notified the "Scheme to Promote Manufacturing of Electric Passenger Cars in India" to attract global Electric Vehicle (EV) manufacturers.
Reduced Customs Duty => The policy slashes the customs duty on imported, completely built-up (CBU) electric passenger cars from a current 70-100% to a concessional rate of 15%. This applies to vehicles with a minimum CIF (Cost, Insurance, and Freight) value of $35,000.
Investment Mandate => To benefit the duty concession, foreign manufacturers must commit to a minimum investment of ₹4,150 crore in India over three years.
Localization Targets (Domestic Value Addition - DVA) => The policy mandates a phased increase in local sourcing. Companies must achieve 25% DVA within three years and ramp it up to 50% within five years of receiving approval.
Import Caps => The benefit of the reduced duty is limited. A maximum of 8,000 EVs can be imported per manufacturer annually, and the total duty foregone is capped at ₹6,484 crore or the actual investment, whichever is lower.
Attracting Global Players => The high import duties were a major deterrent for companies like Tesla. The new policy creates a more attractive entry point for such global leaders to invest in India.
Boosting 'Make in India' => By linking tax benefits to local manufacturing and value addition, the scheme directly promotes the establishment of a domestic EV production ecosystem.
Technology Transfer => To promote the transfer of modern EV technology to India, which is essential for the long-term competitiveness of the domestic industry.
Job Creation & Economic Growth => The establishment of new manufacturing facilities is expected to generate employment and contribute to overall economic growth.
Achieving Climate Goals => Promoting EVs is central to India's commitment to reduce its carbon footprint and achieve its Net Zero emissions target by 2070.
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