New Delhi: The Indian government has approved a scheme to promote the country as a manufacturing destination so that e-vehicles with the latest technology can be manufactured in the country. The policy is designed to attract investments in the e-vehicle space by global EV manufacturers.

"This will provide Indian consumers with access to latest technology, boost the Make in India initiative, and strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude Oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment", New Delhi said in a statement.

To be a part of the policy, a company will have to invest Rs 4150 crore ($500 million), while no maximum cap will be there. 

Companies will be given 3 years to set up manufacturing facilities in India to start commercial production of e-vehicles and reach 50% domestic value addition (DVA) within 5 years at the maximum.

As far as domestic value addition (DVA) during manufacturing is concerned, a localization level of 25% by the 3rd year and 50% by the 5th year will have to be achieved.

The customs duty of 15% (as applicable to CKD units) would be applicable for 5 years.

Vehicles of CIF value of $35,000 or above will be permissible.

The total number of EVs allowed for import would be determined by the total duty foregone or investment made, whichever is lower, subject to a maximum of Rs 6,484 Cr (equal to incentive under the PLI scheme).

Not more than 8,000 EVs per year would be permissible for import under this scheme. The carryover of unutilized annual import limits would be permitted.

The Investment commitment made by the company will have to be backed up by a bank guarantee instead of the customs duty forgone

The bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines.

The announcement comes days after Commerce and Industry Minister Piyush Goyal told news agency PTI that the centre is formulating its policies to attract several global “potential investors" to join EV manufacturing in India.

 At present, the Indian EV market is dominated by local giant TATA with four models on the market.

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