Government Approval for EV Policy
The Government of India has approved the Electric Vehicle (EV) policy to position India as a global e-vehicle manufacturing hub. Under this policy, companies can import a limited number of cars at reduced customs duty by committing to establish manufacturing facilities in India.
However, sources suggest that while global EV players like Tesla and Vinfast stand to benefit from this policy, it may present challenges for domestic companies such as Tata Motors and Mahindra & Mahindra.
Benefits and Challenges of EV Policy
The policy mandates a minimum investment of ₹4,150 crore ($500 million), with no upper limit, within three years to commence commercial production of e-vehicles in India. Companies must achieve a Domestic Value Addition (DVA) of 25% by the third year and 50% by the fifth year.
Under the policy, companies can import e-vehicles at a reduced customs duty of 15% for five years, applicable to Completely Knocked Down (CKD) units with a CIF value of $35,000 or more, significantly lower than the current import tax of 70% or 100%.
Key Policy Details of Electrical Vehicle Policy
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. However, only up to 8,000 EVs per year are permissible for import under this scheme.
To ensure compliance, companies investment commitments must be backed by a bank guarantee, which will be invoked in case of non-achievement of DVA and minimum investment criteria.
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