News Excerpt:

The Union Government has approved a scheme to promote the manufacturing of electric vehicles in India and position the country as an EV manufacturing hub.

 Objectives of the EV policy:

• The new EV policy is designed to attract reputed global EV companies to set up manufacturing facilities in India using the latest technology.
• Its objectives include helping boost the Make in India initiative and strengthening the country's EV ecosystem.

Salient features of the new EV Policy:

• Automakers are permitted to import a maximum of 8,000 electric vehicles (EVs) annually, priced at $35,000 or more, with a reduced import duty of 15%.
• Presently, India imposes 70% to 100% customs duty on imported vehicles, depending on their value.
• To qualify for this benefit, automakers must pledge to invest a minimum of ₹4,150 crore (∼$500 million) in India within the next three years.
• They are required to achieve a 50% Domestic Value Addition (DVA) in vehicles manufactured in India within five years.
• A localization level of 25% by the 3rd year and 50% by the 5th year will have to be achieved
• The scheme will be administered by the Ministry of Heavy Industries (MHI).
• The investment commitment made by the company will have to be backed up by a bank guarantee in place of the custom duty forgone.
• This bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria defined under the scheme guidelines.

Impact of the new policy:

• The new EV policy is going to send a strong signal of confidence down the entire EV ecosystem.
• Entry of companies like Tesla will also bring greater competitiveness to the industry, this will help accelerate the EV ecosystem in India.

Conclusion:

The new policy will help the industry benefit from economies of scale, lower production costs, reduced crude oil imports, lower trade deficit, reduced air pollution (particularly in cities), and a positive impact on health and the environment.