India Fast-Tracks Electric Revolution with New EV Manufacturing Scheme

The Government of India, under the visionary leadership of Prime Minister Shri Narendra Modi, has approved a forward-looking scheme to promote the domestic manufacture of passenger cars, with a special focus on electric vehicles (EVs).

This landmark initiative is aligned 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.

Ministry of Heavy Industries (MHI) has issued a Notification regarding detailed guidelines for the “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI / the Scheme). MHI had issued the Scheme notification on 15^th March 2024. The Department of Revenue, Ministry of Finance, had also issued the notification on 15^th March 2024 for reduced import duties in line with the provisions of the Scheme. The Notice for inviting applications under the Scheme is proposed to be notified shortly, whereby the prospective applicants will be able to submit online applications.

The scheme shall help to attract investments from global EV manufacturers and promote India as a manufacturing destination for e-vehicles. The Scheme will also help put India on the global map for manufacturing of EVs, generate employment and achieve the goal of “Make in India”.

To encourage the global manufacturers to invest under the Scheme, the approved applicants will be allowed to import Completely Built-in Units (CBUs) of e-4W with a minimum CIF value of USD 35,000 at reduced customs duty of 15% for a period of 5 years from the Application Approval Date.

Approved applicants would be required to make a minimum investment of Rs. 4,150 crore in line with the provisions of the scheme.

During the press conference, Union Minister Shri H.D. Kumaraswamy said:

“Under the visionary leadership of Hon’ble Prime Minister Shri Narendra Modi, 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 ₹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.

By mandating domestic value addition targets, the scheme will further boost the ‘Make in India’ and ‘Aatmanirbhar Bharat’ initiatives, while empowering both global and domestic companies to become active partners in India’s green mobility revolution.”

Custom Duty benefits:

• The approved Applicants will be allowed to import CBUs of e-4W manufactured by Global Group Companies with a minimum CIF value of USD 35,000 at reduced customs duty of 15% for a period of 5 years from the Application Approval Date.
• The maximum number of e-4Ws allowed to be imported at the aforesaid reduced duty rate shall be capped at 8,000 nos. per year. The carryover of unutilized annual import limits would be permitted.
• The maximum number of EVs to be imported under this Scheme shall be such that the total duty foregone will be limited to the lower of the following:

1. The maximum duty foregone per Applicant (limited to Rs. 6,484 crore), or
2. Committed investment of the Applicant (minimum Rs. 4150 crore).

• Total duty to be foregone shall be limited to the lower of Rs. 6,484 crore or the Investment made under this Scheme.

• Investment:

• The Standard Operating Procedure (SOP) issued under the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component (PLI Auto Scheme) would be followed to assess the DVA of the Eligible Product as required under the Scheme.
• Certification of DVA of Eligible Product manufactured in India by the Approved Applicant would be done by testing agency(ies) approved by MHI.

• Investment should be made for the domestic manufacturing of Eligible Product. In case the Investment under the Scheme is made on a brownfield project, a clear physical demarcation with the existing manufacturing facility(ies) should be made.
• Expenditure incurred on new Plant, Machinery, Equipment, and Associated Utilities, Engineering Research and Development (ER&D)would be eligible.
• The expenditure incurred on Land will not be considered. However, the Buildings of the main plant and Utilities will be considered as part of the investment, provided it does not exceed 10% of the committed investment.
• Expenditure incurred on Charging Infrastructure would be considered up to a maximum of 5% of the committed investment.

• Bank Guarantee:

• The Applicant’s commitment to set up manufacturing facility(ies), achievement of DVA and compliance with conditions stipulated under the Scheme shall be backed by a Bank Guarantee from a scheduled commercial bank in Indiaequivalent to the total duty to be forgone, or Rs 4,150 crore, whichever is higher, during the scheme period.

The Bank Guarantee should be valid at all times during the tenure of the Scheme.

• Application:

• The window for receiving applications through the Notice Inviting Applications will be for a period of 120 days (or more). Further, MHI shall have the right to open the Application Window, as and when required till 15.03.2026.
• A non-refundable application fee Rs. 5,00,000/- will be payable by the Applicant while filing the Application Form.
• The Notice for inviting applications under the Scheme is proposed to be issued shortly, whereby the prospective applicants would be able to submit online applications. The above notice would be published on the website of the Ministry of Heavy Industries.

Table-I

Eligibility Criteria:

• The Applicant will need to meet the following criteria to qualify and receive benefits under the Scheme:

*Group Company(ies) shall mean two or more enterprises which, directly or indirectly, are ina position to exercise twenty-six percent or more of voting rights in the other enterprise.