Government approves new EV policy to promote EV manufacturing in India

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.


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.

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