The Ministry of Heavy Industries released its proposal to promote the manufacturing of electric passenger cars in India last year.
Following the lead, the initiative is finalized now and it has been introduced as the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).
In the meantime, let’s go through some of the key highlights of this scheme.
Highlights From SPMEPCI
- To start with, the eligible carmakers will enjoy a reduced import duties from 110% to 15% under this scheme.
- The carmakers need to commit to manufacture EVs in India, in order to enjoy the reduced import duty of 15%.
- For showing this commitment, they are mandated to invest USD 500 million (approx Rs 4,150 crore), which has to be made within three years.
- Moving ahead, these carmakers are free to use any of their existing facilities, although any investments made earlier cannot be included in the mandated fresh investment of Rs 4,150 crore.
- If all the above mentioned conditions are met then the carmaker is free to access the reduced import duty for five years.
- Besides this, these participants in India’s new EV scheme will also need to achieve annual turnover milestones as their turnover should be Rs 2,500 crore by the second year.
- They will also have to fulfill the turnover milestones of fourth and fifth year which are Rs 5,000 crore and Rs 7,500 crore, respectively.
- During this time, the manufacturers need to increase localization in a progressive manner. The local value addition via local manufacturing should be 25%, by the end of the third year. Similarly, the localization value should increase to 50% by the end of the 5th year.
Safeguarding The Interest Of Existing EV Manufacturers
It is noteworthy here that the reduced import duty applicable on EVs priced above Rs 30 lakh.
This is to safeguard the interests of existing EV manufacturers in India, similarly the reduced import duty of 15% will be applicable only on EVs priced above USD 35,000 or approx. Rs 30 lakh.
They have applied these limits as this will ensure that the current set of EVs available in the mainstream market remain protected from unfair trade practices such as dumping.
This will mainly safeguard the locally manufactured electric cars such as Mahindra XEV 9e, BE 6, Tata Harrier EV, Punch EV, Nexon EV, Curvv EV, MG Windsor, Hyundai Creta Electric, etc.
It will also support the upcoming options including Maruti e-Vitara, Sierra EV, etc.
They have also applied a cap of 8,000 units per annum for accessing the reduced import duty.
Beyond this limit, they will have to pay the standard import duty of 110%.
Besides this, the total savings cannot be more than Rs 6,484 crore or the actual investment made, whichever is lower, according to the SPMPCI.
Although they are allowed to carry over any unused annual quotas to the next year.
