On Monday, the government announced guidelines under the Scheme to Promote Manufacturing of Electric Passenger Cars in India. Under these guidelines, companies would have the opportunity to import up to 8,000 electric four-wheeler units annually with a reduced import duty of 15 percent, compared to the current rates of 70-100 percent. However, this would be contingent upon their commitment to invest Rs 4,150 crore towards establishing local manufacturing facilities.
Although the scheme had been initially notified on March 15 of the previous year, the Heavy Industries Ministry issued detailed guidelines recently, setting the stage for electric car manufacturers to submit their applications when the application window opens. Officials indicated that this window would likely open in a couple of weeks and remain accessible for at least 120 days.
Minimum investment
To incentivise global manufacturers to invest under the scheme, approved applicants would be permitted to import Completely Built Units (CBUs) of electric four-wheelers with a minimum CIF value of $35,000, benefiting from the lowered customs duty for a period of five years from the date of application approval. According to an official statement, applicants would be required to make the minimum investment of Rs 4,150 crore as stipulated by the scheme.
Maximum duty waiver
The maximum duty waiver for each applicant has been limited to Rs 6,484 crore or the investment made under the scheme. The Heavy Industries Ministry mentioned that the minimum commitment for investment in India during a three-year period is Rs 4,150 crore. Applicants must set up manufacturing facilities and start operations for producing eligible products, specifically electric four-wheelers, within three years from the date their application is approved.
Investment-linked benefits
Expenditures on new plants, machinery, equipment, and associated utilities, as well as Engineering Research and Development (ER&D), will qualify for investment-linked benefits under the scheme. However, costs incurred for land will not be considered, although expenditures for new buildings of the main plant and utilities will be eligible, as long as they do not exceed 10 percent of the committed investment.
The Ministry also emphasised that a minimum domestic value addition (DVA) of 25 percent must be achieved within three years, and a DVA of 50 percent is required within five years from the issuance date of the approval letter for applicants under the scheme.
Moreover, spending on charging infrastructure would be included as up to 5 percent of the committed investment. The applicant's promise to establish manufacturing facilities, meet DVA targets, and comply with the scheme’s conditions must be secured with a bank guarantee from a scheduled commercial bank in India, equivalent to either the total duty benefit or Rs 4,150 crore, whichever is greater.
Application window
The application window, as indicated in the notice inviting applications, would be open for a duration of 120 days or more. Additionally, the Ministry of Heavy Industries retains the right to reopen the application window as needed until March 15, 2026.
Application fee
Applicants would be required to pay a non-refundable application fee of Rs 5,00,000 upon filing their application forms. To qualify for the benefits under the scheme, an applicant must demonstrate that their global group revenue from automotive manufacturing is a minimum of Rs 10,000 crore. Furthermore, they must have a global investment in fixed assets of at least Rs 3,000 crore, based on the most recent audited annual financial statements at the time they submit their application.
Inputs from PTI
