In a major push to position India as a global hub for electric vehicle (EV) manufacturing, the Government of India has rolled out a progressive new policy aimed at accelerating domestic production of passenger EVs.

Under the leadership of Prime Minister Narendra Modi, this initiative is a part of India’s broader strategy to achieve carbon neutrality by 2070 and transition toward environmentally sustainable mobility solutions.

The Ministry of Heavy Industries (MHI) has released detailed operational guidelines for the newly introduced “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI).

Originally announced on March 15, 2024, the scheme outlines various fiscal and policy incentives designed to attract significant investments from global automotive leaders. Complementing this, the Department of Revenue under the Ministry of Finance has also issued notifications providing for concessional import duties, aligned with the scheme’s framework.

Highlights

A key highlight of the initiative is its focus on incentivizing international electric vehicle manufacturers to set up production bases in India. Approved companies under the scheme will be permitted to import fully built electric four-wheelers—each with a minimum Cost, Insurance, and Freight (CIF) value of $35,000—at a significantly reduced customs duty rate of 15% for a period of five years from the date of approval.

In return, participating companies will be expected to commit to a minimum investment of ₹4,150 crore (approximately $500 million) toward setting up manufacturing facilities, localizing production, and generating skilled employment within the country.

This landmark scheme is designed not only to enhance India’s manufacturing capacity but also to create quality jobs, reduce dependence on fossil fuels, and place the country at the forefront of the global electric mobility revolution. Application submissions are expected to open soon, with online portals being set up to invite proposals from interested stakeholders.

The Ministry of Heavy Industries has approved a forward-looking scheme to promote the domestic manufacture of passenger cars, with a special focus on electric vehicles. This landmark initiative aligns with India’s national goals of achieving Net Zero by 2070, fostering sustainable mobility, driving economic growth, and reducing environmental impact. It is designed to firmly establish India as a premier global destination for automotive manufacturing and innovation.

The scheme is strategically crafted to position India as a global hub for electric vehicle manufacturing. With a minimum investment threshold of Rs 4,150 crore, it provides an enabling policy environment for leading global and domestic players to establish long-term manufacturing footprints in the country.

Through calibrated customs duty concessions and clearly defined domestic value addition (DVA) milestones, the scheme strikes a balance between introducing cutting-edge EV technologies and nurturing indigenous capabilities.