Centre to conduct second round of consultation for new EV schemes

The Centre plans to conduct a second round of consultations with the automotive industry stakeholders for its flagship scheme to promote investments in electric vehicle (EV) manufacturing through import concessions, the Scheme to Promote the Manufacturing of Electric Passenger Cars in India, within a month.

The Ministry of Heavy Industries will release policy guidelines and start accepting applications after July 15.

“The policy guidelines provide a window of 120 days or more to publish the guidelines and open the application process. The second round of consultations is expected to conclude by the end of this month,” government officials said.

In its first official engagement with the Indian government, Elon Musk-led Tesla and other global automotive manufacturers sought clarification on the new EV policy, specifically regarding investment guidelines and the timeline for the domestic value addition (DVA) requirement.

The ministry has now clarified the definition of investment for all stakeholders.

According to government officials, the definition of investment will be similar to that used in the PLI (production-linked incentive) Auto scheme.

According to the PLI Auto guidelines released in September 2021, an investment is defined as expenditure incurred on plant, machinery, equipment, and associated utilities. Investment also includes expenditure on packaging, freight/transport, insurance, and erection and commissioning of the plant, machinery, equipment, and associated utilities.

However, the building cost of up to 10 per cent can be considered an investment. But royalty paid on the import of technology will not be considered an investment.

Bosch had been demanding the addition of royalty paid for technology transfer as an investment. A new investment in setting up a new production line, even in an existing manufacturing facility, will be eligible to participate in the scheme, the official said.

Sources said, “There is a provision in the scheme that the application window can be opened a second time.”

The new EV policy announced in March allows reduced import taxes on original equipment manufacturers that commit to investing at least $500 million (Rs 4,150 crore) and establishing a manufacturing plant within three years. Additionally, they are also required to achieve a 25 per cent DVA within the initial three years and 50 per cent by their fifth year of operations in the country.

Major global companies, including VinFast, Mercedes-Benz, BMW, Kia, Volkswagen, Toyota, Hyundai, and Renault-Nissan, were part of the stakeholder consultations that took place last month.

Indian car makers such as Tata Motors, Maruti Suzuki, and Mahindra & Mahindra were present during the first round of the meeting. Tesla was represented by its advisor, The Asia Group India, at the meeting with the ministry.

The policy proposes to reduce import duties for interested EV makers to 15 per cent from the current 70 per cent or 100 per cent on vehicles having a CIF (cost, insurance, and freight) value of $35,000 and above for five years from the date of issuance of the approval letter by the government. However, companies seeking the Customs duty relaxation need to invest $500 million within three years.