The Ministry of Heavy Industries (MHI) has notified the detailed guidelines for the “Scheme to Promote Manufacturing of Electric Passenger Cars in India”. The guidelines were initially announced on March 15, 2024. The scheme aims to position India as a global manufacturing destination for electric vehicles (EVs) and supports the country’s Make in India initiative. The scheme permits approved applicants to import completely built-up (CBU) electric four-wheelers (e-4W) manufactured by global group companies with a minimum cost, insurance and freight value of $35,000 at a reduced customs duty of 15 per cent for five years. Annual CBU imports are capped at 8,000 units, with carryover allowed for unused capacity. The total duty foregone under the scheme is capped at Rs 6.484 billion or the actual investment committed by the applicant under the scheme, whichever is lower. In cases where investment is made in brownfield projects, physical demarcation of new manufacturing units is required. Eligible investment includes capital expenditure on plant, machinery, engineering research and development, as well as the associated utilities and building costs up to 10 per cent of total investment. Costs related to land acquisition are excluded, and expenditure on charging infrastructure is capped at 5 per cent of committed investment.
Under the scheme, approved applicants must make a minimum investment of Rs 4.15 billion over a three-year period, with no maximum investment cap. Manufacturers must commence operations for producing eligible e-4W within three years from the date of application approval. A minimum domestic value addition (DVA) of 25 per cent is required within three years and 50 per cent within five years. DVA will be assessed following the standard operating procedure of the production-linked incentive scheme for automobile and auto components, and certified by agencies approved by the MHI.
Applicants must submit a bank guarantee from a scheduled commercial bank in India, equal to the total duty to be foregone or Rs 4.15 billion, whichever is higher. The bank guarantee is valid throughout the scheme period. A non-refundable application fee of Rs 500,000 is applicable. The application window will remain open for 120 days from the issuance of the notice and may be reopened by the MHI until March 15, 2026. According to the eligibility criteria, applicants must have a minimum global group revenue of Rs 10 billion from automotive manufacturing and Rs 3 billion in global fixed assets, based on the latest audited financial statements.
