VinFast's ₹16,000-cr EV plant in TN misses out on India's incentive scheme

VinFast's EV plant in Tamil Nadu becomes ineligible for India's EV incentive scheme as investment was capitalised before approval date; fresh ₹4,150-crore needed to qualify

Vietnam-based electric vehicle manufacturer VinFast’s $2 billion (₹16,000 crore) investment in Tamil Nadu failed to qualify for incentives under the ‘Scheme to Promote Manufacturing of Electric Passenger Cars in India’. 

Officials in the government explained that the scheme mandates investments to be capitalised in the applicant’s books after the date of approval. This means that equipment and machinery must be put into use only after an applicant has been formally approved under the scheme. Investments made prior to approval do not count towards eligibility, news agency PTI reported. 

Gazette notification on Scheme to Promote Manufacturing of Electric Passenger Cars in India, Ministry of Heavy Industries

 

 

The next application window for the scheme is expected to open within a couple of weeks and will remain available for at least 120 days.   

 

VinFast’s plans and expansion strategy

VinFast, the electric vehicle division of Vietnamese conglomerate Vingroup, is in the process of setting up its $2-billion manufacturing facility in Thoothukudi, Tamil Nadu. The company is also in talks with the governments of Andhra Pradesh and Telangana to expand its footprint further within India. 

VinFast aims to launch its VF7 and VF6 models in the Indian market ahead of the festival season this year. The company targets an annual production capacity of 150,000 electric vehicles in India over the next few years, with plans to export these vehicles to markets in West Asia and Africa. 

An official speaking to PTI said, “They [VinFast] have already capitalised the investment so they will not qualify based on that investment for benefits under the scheme. They [VinFast] will have to make a fresh investment of ₹4,150 crore to qualify under the scheme. They are urging us to consider the investment already made, which we cannot accept.”

 

Scheme guidelines and import concessions

The recently announced guidelines for the Scheme to Promote Manufacturing of Electric Passenger Cars in India specify that approved applicants will be allowed to import Completely Built Units (CBUs) of electric four-wheelers with a minimum CIF value of $35,000 at a reduced customs duty rate of 15 per cent. This concession is valid for five years from the date of application approval. 

To remain eligible, applicants must invest at least ₹4,150 crore in accordance with the scheme’s provisions. The Scheme to Promote Manufacturing of Electric Passenger Cars was officially notified on March 15, 2024, as part of India’s broader efforts to boost electric vehicle production domestically.