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The Central government intends to hold a second round of consultations with automotive industry stakeholders within a month for its flagship scheme, the Scheme to Promote the Manufacturing of Electric Passenger Cars in India. This scheme aims to encourage investments in electric vehicle (EV) manufacturing through import subsidies.
The Ministry of Heavy Industries will publish policy guidelines and begin accepting applications after July 15. “The policy guidelines provide a window of 120 days or more to publish the guidelines and open the application process. The second round of consultations is expected to conclude by the end of this month,” government officials said.
Elon Musk-led Tesla and other global automakers sought clarification on the new EV policy in their first official engagement with the Indian government, specifically on investment requirements and the timing for the domestic value addition (DVA) need.
The ministry has clarified the definition of investment for all stakeholders.
According to government authorities, the definition of investment will be the same as in the PLI (production-linked incentive) Auto scheme. The PLI Auto standards, published in September 2021, define an investment as any cost incurred for plant, machinery, equipment, and related utilities. The cost of packing, freight/transport, insurance, and the assembly and commissioning of the plant, machinery, equipment, and related utilities are all included in the investment. However, a 10% increase in construction costs can be considered an investment. However, technology import royalties will not be regarded as investments.
Bosch had been demanding the addition of royalty paid for technology transfer as an investment. The official said that a new investment in setting up a new production line, even in an existing manufacturing facility, will be eligible to participate in the scheme.
The new EV policy announced in March allows reduced import taxes on original equipment manufacturers that commit to investing at least $500 million (₹4,150 crore) and establishing a manufacturing plant within three years. Additionally, they are also required to achieve a 25% DVA within the initial three years and 50% by their fifth year of operations in the country.
Major global companies, including VinFast, Mercedes-Benz, BMW, Kia, Volkswagen, Toyota, Hyundai, and Renault-Nissan, were part of the stakeholder consultations that took place last month.
Indian car makers such as Tata Motors, Maruti Suzuki, and Mahindra & Mahindra were present during the first round of the meeting. Tesla was represented by its advisor, The Asia Group India, at the meeting with the ministry.
The policy proposes reducing import duties for interested EV makers to 15% from the current 70% or 100% on vehicles with a CIF (cost, insurance, and freight) value of $35,000 and above for five years from the date the government issues the approval letter. However, companies seeking the Customs duty relaxation need to invest $500 million within three years.
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