TL; DR
- As part of the revision, the government could reduce the import tariff below 15% or eliminate it for EVs.
- Last but not least, the government could also lower the domestic value addition (DVA) requirements.
Subject to the progress of ongoing bilateral trade agreement (BTA) negotiations with the United States and other free trade agreement (FTA) discussions, the Indian government is poised to revise the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), commonly known as the EV policy.
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Here’s What The Revised EV Policy Might Offer
As part of the revision, the government could reduce the import tariff below 15% or eliminate it for EVs. Furthermore, the government could lower the initial investment requirement of Rs. 4,150 crores for companies to encourage investment from smaller companies or global manufacturers hesitant about incurring a high upfront cost.
Last but not least, the government could also lower the domestic value addition (DVA) requirements. The changes will help India take a step toward becoming a global EV manufacturing hub, which isn’t impossible with global leaders entering the market and setting up their facilities. In addition, the United States government is pushing for tariff reductions on automobiles.
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Here Are The Initial EV Policy Requirements
“The Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI), notified in March 2024, offers significant import duty concessions for completely built electric four-wheelers—but only to applicants committing a minimum investment of USD 500 million to establish manufacturing facilities in India,” says Venkatesh Raman Prasad, from JSA Advocates & Solicitors who focusses extensively in the energy and foreign investment sector.
“However, with FTA negotiations gaining momentum, India is re-evaluating its approach, aiming to strike a careful balance between safeguarding the domestic EV ecosystem, attracting global investment, and securing favorable tariff access for Indian exports,” Prasad adds.
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