The Ministry of Heavy Industries has released detailed guidelines for the “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI), which was originally announced on March 15, 2024. The scheme aims to attract domestic and global investment in electric vehicle (EV) manufacturing and support India’s broader environmental and industrial goals. Below are 10 key highlights from the newly notified framework:
1. Lower customs duty for imported EVs
Approved applicants will be allowed to import fully built electric four-wheelers (CBUs) with a minimum CIF value of $35,000 at a reduced 15 per cent customs duty for a period of five years from the date of approval.
2. Minimum investment threshold
To qualify, applicants must commit to investing at least Rs 4,150 crore (approximately $500 million) in EV manufacturing infrastructure within a three-year window.
3. Mandatory localisation targets
Companies are required to achieve a minimum 25 per cent domestic value addition (DVA) within three years and at least 50 per cent DVA within five years. These targets will be assessed in accordance with the procedures defined under the Production Linked Incentive (PLI) Auto Scheme.
4. Eligibility criteria geared toward large firms
Applicants must demonstrate global automotive manufacturing revenue exceeding Rs 10,000 crore and fixed assets worth at least Rs 3,000 crore, based on the latest audited financial statements. This is likely to limit participation to larger domestic and international companies.
5. Import cap and limit on duty benefits
A maximum of 8,000 four-wheeler EVs per year may be imported at the reduced duty rate, with rollover of unused import limits permitted. The total customs duty benefit per applicant is capped at the lower of Rs 6,484 crore or the actual investment made under the scheme.
6. Bank guarantee requirement
Applicants must provide a bank guarantee equivalent to the greater of Rs 4,150 crore or the total customs duty exemption availed. This guarantee must remain valid throughout the duration of the scheme and serves as a financial safeguard for compliance.
7. Scope of eligible investment
Only expenses on new plant, machinery, equipment, and R&D will be considered toward the investment commitment. Land costs are excluded, while buildings can account for up to 10 per cent, and charging infrastructure up to 5 per cent, of the committed investment.
8. Application process to begin shortly
The scheme’s application window will open following a Notice Inviting Applications (NIA), expected to be published soon. Once issued, the window will remain open for a minimum of 120 days. The government may reopen the window as required until March 15, 2026.
9. Alignment with international trade developments
The scheme operates alongside broader trade developments, including the India-UK Free Trade Agreement, which is gradually reducing import duties on premium EVs to 10 per cent. Similar trade arrangements with the US and EU may influence future market competition.
10. Broader policy objective
The government has positioned the scheme as part of India’s push toward net-zero emissions by 2070 and efforts to boost domestic manufacturing. The initiative is expected to generate employment, foster technology adoption, and enhance India’s global manufacturing footprint in the EV sector.
The scheme is now operational with detailed guidelines in place, while the application window is expected to open soon. Industry stakeholders are watching closely as the policy moves toward implementation.
1. Lower customs duty for imported EVs
Approved applicants will be allowed to import fully built electric four-wheelers (CBUs) with a minimum CIF value of $35,000 at a reduced 15 per cent customs duty for a period of five years from the date of approval.
2. Minimum investment threshold
To qualify, applicants must commit to investing at least Rs 4,150 crore (approximately $500 million) in EV manufacturing infrastructure within a three-year window.
3. Mandatory localisation targets
Companies are required to achieve a minimum 25 per cent domestic value addition (DVA) within three years and at least 50 per cent DVA within five years. These targets will be assessed in accordance with the procedures defined under the Production Linked Incentive (PLI) Auto Scheme.
4. Eligibility criteria geared toward large firms
Applicants must demonstrate global automotive manufacturing revenue exceeding Rs 10,000 crore and fixed assets worth at least Rs 3,000 crore, based on the latest audited financial statements. This is likely to limit participation to larger domestic and international companies.
5. Import cap and limit on duty benefits
A maximum of 8,000 four-wheeler EVs per year may be imported at the reduced duty rate, with rollover of unused import limits permitted. The total customs duty benefit per applicant is capped at the lower of Rs 6,484 crore or the actual investment made under the scheme.
6. Bank guarantee requirement
Applicants must provide a bank guarantee equivalent to the greater of Rs 4,150 crore or the total customs duty exemption availed. This guarantee must remain valid throughout the duration of the scheme and serves as a financial safeguard for compliance.
7. Scope of eligible investment
Only expenses on new plant, machinery, equipment, and R&D will be considered toward the investment commitment. Land costs are excluded, while buildings can account for up to 10 per cent, and charging infrastructure up to 5 per cent, of the committed investment.
8. Application process to begin shortly
The scheme’s application window will open following a Notice Inviting Applications (NIA), expected to be published soon. Once issued, the window will remain open for a minimum of 120 days. The government may reopen the window as required until March 15, 2026.
9. Alignment with international trade developments
The scheme operates alongside broader trade developments, including the India-UK Free Trade Agreement, which is gradually reducing import duties on premium EVs to 10 per cent. Similar trade arrangements with the US and EU may influence future market competition.
10. Broader policy objective
The government has positioned the scheme as part of India’s push toward net-zero emissions by 2070 and efforts to boost domestic manufacturing. The initiative is expected to generate employment, foster technology adoption, and enhance India’s global manufacturing footprint in the EV sector.
The scheme is now operational with detailed guidelines in place, while the application window is expected to open soon. Industry stakeholders are watching closely as the policy moves toward implementation.
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