Centre likely to roll out electric vehicle policy guidelines by Sept-end

Plan includes provisions for reduced duties on imported cars contingent on committed funding

Policy guidelines on the Centre’s “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI), which include provisions for reduced customs duties on imported cars if there is a concomitant investment commitment in India, are expected to come by September, according to officials.

According to government officials working on the scheme, the portal for original equipment manufacturers (OEMs) to submit applications will open only after the guidelines are released.

“We are finalising the guidelines, which will take around two months,” an official told Business Standard.

The scheme provides a window of 120 days or more from the date of its notification to receive applications.

The notification for the scheme was issued on March 15, 2024. “Applications will be invited within 120 days (or more) of notification of this scheme,” the scheme notification said.

Officials say the delay in releasing the guidelines is because of the Lok Sabha elections and Budget preparations. “The policy guidelines do not have a deadline,” an official said.

However, industry executives suggest the delay is because of a lacklustre response to the scheme from automakers.

“Tesla ghosting the government is the reason for this delay. The government will release the guidelines only after getting the nod from Elon Musk (Tesla chief),” an industry executive said.

When Musk cancelled his India visit and the meeting with Prime Minister Narendra Modi, citing “very heavy” Tesla obligations, the investment plans of the American electric-vehicle (EV) major in this country have remained stalled.

Top government officials say Tesla is silent on its proposed participation in the flagship scheme. Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Rajesh Kumar Singh on Thursday said “the tweet after the election is the last we have heard from Tesla”.

The scheme allows reduced import duty for interested electric-vehicle makers to 15 per cent from 70 per cent now, or 100 per cent on vehicles having a CIF (cost, insurance, and freight) value of $35,000 (Rs 29 lakh) and above for five years from the date of issuing the approval letter by the government.

According to the scheme’s notification, all original equipment manufacturers (OEMs) will qualify for reduced import duty on certain electric vehicles if they invest at least $500 million (Rs 4,150 crore) and establish a manufacturing plant within three years.

Though the guidelines are being finalised, officials said the basic eligibility criteria for the scheme would remain unchanged.

Eyeing fresh investment

The scheme seeks to enhance EV manufacturing in the country by attracting investment from global players such as Tesla and Chinese giant BYD, which do not have manufacturing plants in India, as well as from existing players like VinFast, Kia, Škoda, BMW, and Mercedes-Benz.

Vietnam-based EV player VinFast, a global competitor to Tesla, showed concern about the investment criteria during the Ministry of Heavy Industries’ initial consultations in April. The company advocates including its prior investment in India to qualify for incentives under the scheme.

VinFast has begun constructing a plant in Tamil Nadu and intends to invest $500 million in India over five years. But since this investment was made before the scheme became effective, the Vietnamese automaker will not be eligible for incentives on it. Its new investment will be eligible for benefits from the SPMEPCI.

“The policy guidelines will mirror those of the production-linked incentive scheme, which do have provision for incentivising investments made before the implementation of the scheme,” a government official said.  

While VinFast has not stated it will not participate in the new scheme, sources close to the company indicate it will take a decision only after the release of the guidelines.

The blueprint

Seeks to enhance electric vehicle  manufacturing by enticing investment from global players

Aims to provide a window of 120 days or more from date of the scheme’s notification to receiving applications

All OEMs will qualify for reduced import taxes on certain EVs if they commit to invest Rs 4,150 cr and more

Allows reduced import duties on interested EV makers to 15 per cent from the current 70 per cent