India Launches EV Manufacturing Scheme with Import Duties Slashed to 15%
The Government of India has introduced the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMPCI) to encourage local production of electric vehicles. Under this scheme, a reduced import duty of 15% will apply for five years on premium electric cars priced above USD 35,000.
To qualify, carmakers must invest at least INR 4,150 crore (approximately USD 500 million) in India within three years. Existing facilities can be used for assembly, but past investments on land and buildings won't count toward the required investment. The scheme allows import of up to 8,000 EVs per year at the reduced rate, with any unused quota carried forward. Beyond this limit, the standard 110% duty will apply.
Eligible companies must also meet specific milestones: an annual turnover of INR 2,500 crore by the second year, INR 5,000 crore by the fourth, and INR 7,500 crore by the fifth. A local manufacturing facility must be operational by the third year, with 25% local value addition, increasing to 50% by year five.
Investment can include manufacturing equipment, R&D facilities, and charging infrastructure (up to 5% of the total). Land and buildings are considered only if part of the main plant and limited to 10% of the total investment. An online portal for applications will launch soon, with approvals expected to begin by August 2025.
According to Heavy Industries Minister H.D. Kumaraswamy, companies like Hyundai, Kia, Mercedes-Benz, Skoda, and Volkswagen have expressed formal interest. Tesla, however, is not participating and is expected to face full import duties when entering India in 2025.
