Indian Economy News

The government approves the E-vehicle policy to promote India as a manufacturing destination for EVs.

The Union Government has approved a scheme to position India as a leading manufacturing hub for advanced E-vehicle (EV) technology, attracting investments from global EV manufacturers. This initiative aims to provide Indian consumers with cutting-edge technology, boost the Make in India campaign, and foster healthy competition among EV players to increase production volumes, scale economies, and lower costs. The policy mandates a minimum investment of US$ 500.9 million (Rs. 4150 crore), with no upper limit, and requires manufacturers to set up production facilities within three years, achieve a 50% domestic value addition (DVA) within five years, and adhere to specific customs duty exemptions tied to investment commitments and DVA targets. Additionally, bank guarantees are required to ensure compliance with investment and localization criteria outlined in the scheme.

The scheme is expected to catalyse economic growth, reduce trade deficits, lower the cost of production, and yield positive environmental and health outcomes by positioning India as a premier destination for EV manufacturing. The policy framework emphasizes localization, with DVA targets of 25% by the third year and 50% by the fifth year and offers customs duty exemptions to incentivize investment and production. Import allowances for EVs are tied to investment levels, and bank guarantees are required to ensure manufacturers adhere to investment and localization requirements. The scheme underscores the government's commitment to advancing India's EV industry while bolstering the nation's economic and environmental sustainability.

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