India’s EV Manufacturing Guidelines
The Government of India introduced new guidelines to boost domestic manufacturing of electric vehicles (EVs). The Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) aims to attract global manufacturers. This initiative comes amid Tesla’s reluctance to invest in manufacturing within the country. The guidelines offer a reduced import duty of 15% for completely built units (CBUs) under specific conditions.
SPMEPCI
The SPMEPCI is designed to promote local manufacturing of electric passenger cars. It allows manufacturers to import up to 8,000 electric vehicles annually at a concessional duty rate. The scheme is valid for five years from the approval date. This initiative is part of India’s broader strategy to become a global hub for electric vehicle production.
Investment Requirements
To qualify for the SPMEPCI, companies must invest at least ₹4,150 crore (approximately $500 million) in local manufacturing. This investment must occur within three years, during which manufacturers must establish production facilities and begin operations. Additionally, applicants must have a global revenue of at least ₹10,000 crore.
Domestic Value Addition Targets
The guidelines stipulate that electric vehicle manufacturers must achieve a minimum domestic value addition (DVA) of 25% within three years. Furthermore, a minimum DVA of 50% must be reached within five years from the approval date. This requirement aims to ensure that portion of the vehicle’s value is derived from local resources.
Eligibility for Import Duty Reduction
Approved applicants can import CBUs of electric four-wheelers with a minimum cost-insurance-freight (CIF) value of $35,000. The reduced customs duty of 15% applies for a maximum of 8,000 units per year. Any unused import quota can be carried over to subsequent years.
Impact on Global Manufacturers
The SPMEPCI has attracted interest from European manufacturers like Mercedes-Benz and Volkswagen, as well as South Korean companies Hyundai and Kia. However, Tesla has shown limited interest in local manufacturing, focusing instead on establishing showrooms. The government expressed disappointment at Tesla’s lack of commitment to invest in manufacturing.
Future Prospects
The Government of India aims to position the country as a leading player in the global electric vehicle market. The SPMEPCI is important step in this direction. The initiative is expected to enhance local manufacturing capabilities and create jobs.
Import Duty for Non-Compliant Firms
If Tesla or any other manufacturer does not commit to the investment under the SPMEPCI, they will face standard customs duties. For vehicles costing over $40,000, the duty is currently set at 110%. This duty serves as a deterrent for non-compliance.
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