India has launched a revised incentive program designed to attract foreign automakers to establish electric vehicle (EV) manufacturing facilities within the country. This initiative comes with significantly reduced import duties in exchange for firm investment commitments. The Ministry of Heavy Industries announced comprehensive guidelines for the program, allowing global manufacturers to import a limited number of fully built EVs valued at $35,000 or more at a concessional duty rate of 15 percent, compared to the existing tariffs of 70 to 110 percent.
In return, participating companies must commit to investing a minimum of Rs 4,150 crore, approximately $486 million, and begin local production of electric passenger vehicles within three years of receiving approval. Heavy Industries Minister H.D. Kumaraswamy emphasized that this policy is a strategic move to position India as a global manufacturing hub for EVs, providing a robust framework to attract both foreign and domestic manufacturers looking for a long-term foothold in the burgeoning Indian EV market.
Approved companies will be allowed to import up to 8,000 vehicles annually at the reduced tariff, and any unused quota can roll over to the following years. The total benefits from lower duties are capped at Rs 6,484 crore or the actual investment made, whichever is less. To qualify for the program, applicants must belong to corporate groups with an annual revenue of at least Rs 10,000 crore from automotive manufacturing and a minimum of Rs 3,000 crore in fixed assets. A non-refundable application fee of Rs 5 lakh is also applicable. The ministry plans to accept applications for at least 120 days starting this month, with a final deadline of March 15, 2026, although new application windows may open at the government’s discretion.
Companies are required to meet revenue targets of Rs 5,000 crore in the fourth year and Rs 7,500 crore in the fifth year following approval. Failure to meet these targets could incur penalties of up to 3 percent of the revenue shortfall.
The program includes mandatory local content requirements, stipulating that manufacturers must achieve 25 percent domestic value addition (DVA) within three years and raise it to 50 percent by the fifth year. The government asserts that these thresholds will bolster its “Make in India” and “Aatmanirbhar Bharat” initiatives while allowing firms to introduce cutting-edge EV technologies. Kumaraswamy stated that the program seeks to balance the infusion of technology with the development of local capabilities.
Initially, the government announced this plan in March 2024 but postponed it for revisions to attract larger players and implement stricter eligibility criteria. Automakers like Mercedes-Benz, Hyundai, Kia, Skoda, and Volkswagen have shown interest in entering the Indian market under these revised terms. However, Tesla, which has been in talks with Indian officials for several years, is not expected to manufacture vehicles in India for now, though it is preparing to begin vehicle sales.
These new guidelines may intensify competition for Indian automakers currently leading the local EV market, including Tata Motors and Mahindra & Mahindra, who previously lobbied against broad cuts in import duties to protect their early investments. As of now, EV penetration in India remains modest, with only 2.5 percent of the 4.3 million passenger vehicles sold in 2024 being electric. The government aims to increase this figure to 30 percent by 2030.
Original Source: https://www.firstpost.com/tech/auto-tech/india-tweaks-guidelines-for-made-in-india-electric-cars-allows-importing-vehicles-at-lower-tariff-13893838.html
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Publish Date: 2025-06-02 20:15:00
