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Government Approves Scheme to Promote Manufacturing of E-Vehicles in India

New Delhi: In a significant move aimed at boosting the manufacturing sector and promoting sustainable transportation, the Government of India has approved a scheme to promote India as a manufacturing destination for e-vehicles with the latest technology. The scheme aims to attract investments from reputed global electric vehicle (EV) manufacturers, thereby providing Indian consumers access to cutting-edge technology while bolstering the Make in India initiative.

The policy is expected to strengthen the EV ecosystem by fostering healthy competition among industry players, leading to higher volumes of production, economies of scale, and lower production costs. Additionally, it is anticipated to reduce imports of crude oil, lower the trade deficit, and mitigate air pollution, particularly in urban areas, thereby positively impacting public health and the environment.

Key highlights of the scheme include:

Minimum Investment Requirement: Companies interested in availing the benefits of the scheme are required to make a minimum investment of Rs 4150 crore (approximately USD 500 million), with no limit on maximum investment.

Timeline for Manufacturing: Companies must set up manufacturing facilities in India within 3 years and commence commercial production of e-vehicles. They are also required to achieve a domestic value addition (DVA) of 50% within 5 years.

Localization Targets: A localization level of 25% by the 3rd year and 50% by the 5th year of manufacturing must be achieved.

Customs Duty Incentives: Companies availing the scheme will benefit from a customs duty of 15% applicable to completely knocked-down (CKD) units for a period of 5 years.

Import Limit: EVs with a CIF value of USD 35,000 or above will be permissible for import. However, the total number of EVs allowed for import will be determined by the total duty foregone or investment made, subject to a maximum of ₹6,484 crore.

Annual Import Limit: Not more than 8,000 EVs per year will be permissible for import under the scheme, with provisions for the carryover of unutilized annual import limits.

Bank Guarantee Requirement: Investment commitments made by companies must be backed by a bank guarantee equivalent to the customs duty foregone. This guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria.

The scheme reflects the government’s commitment to promoting clean and sustainable transportation solutions while bolstering domestic manufacturing and job creation. By incentivizing investments in the e-vehicle sector, the scheme aims to accelerate India’s transition towards a greener and more energy-efficient future.

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