India’s EV Revolution Begins! 15% Import Duty to Attract Global Giants

The Indian government has announced the launch of a new scheme SPMEPCI (Scheme to Promote Manufacturing of Electric Passenger Cars in India) to promote the “Make in India” initiative. Under this scheme, global companies will be encouraged to manufacture electric cars in India. Selected companies will be able to import limited electric cars at low custom duty (15%). In return, they will have to invest Rs 4,150 crore in India and ensure 50% localization. Big companies like Mercedes-Benz, Hyundai, Kia have shown interest in this, which can make India’s EV future even brighter.

Government is bringing a new scheme

The Government of India has introduced a new scheme to promote the “Make in India” initiative, named – Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). Under this scheme, the government aims to make India a global hub for electric car manufacturing.

What is the main objective of the scheme?

Under the SPMEPCI scheme, the government will encourage selected global companies to manufacture electric cars in India. These companies will be allowed to import a limited number of CBU (Completely Built Units) electric cars at only 15% custom duty, while the normal rate is up to 110%.

Who will be able to apply?

The benefit of this scheme will be available only to those companies whose global group level annual income is Rs 10,000 crore and investment in fixed assets is more than Rs 3,000 crore. Interested companies will have to apply by paying a non-refundable fee of Rs 5 lakh.

What are the terms of investment and localization?

After getting approval, companies will have to invest at least Rs 4,150 crore in three years. Also, they will be required to achieve 25% local value addition (DVA) in the first three years and 50% DVA in five years.

Revenue target and penalty rules

Under SPMEPCI, companies are required to generate a minimum revenue of Rs 5,000 crore in the fourth year and Rs 7,500 crore in the fifth year. If a company fails to meet this target, it will have to pay a penalty of up to 3% on the loss.

What things will be given importance in investment?

Both greenfield and brownfield projects will be included in the investment. In this, the cost of machinery, equipment, main plant building (up to 10%), R&D, and charging infrastructure (up to 5%) will be considered. The cost of land will not be included.

Import limits and interest from major players

Approved companies will be allowed to import up to 8,000 electric cars with a minimum CIF value of $35,000 at 15% duty, provided the total duty exemption does not exceed Rs 6,484 crore or their committed investment amount. Tesla may not be interested in manufacturing in India, but companies like Mercedes-Benz, Hyundai, Kia, Volkswagen, and Skoda are showing interest.