The Government of India has announced detailed guidelines for the Scheme to Promote Manufacturing of Electric Passenger Cars in India, to attract foreign investment and position the country as a global hub for electric vehicle (EV) production. The Ministry of Heavy Industries, which is implementing the initiative, outlined the terms for interested global players including relaxed import duties and mandatory domestic investments to support this long-term vision.
The plan permits approved companies to import up to 8,000 electric four-wheelers annually at a significantly reduced customs duty of 15 percent, provided the vehicle has a minimum CIF (cost, insurance, and freight) value of USD 35,000. This concession is valid for five years, but only if the applicant commits to invest at least INR 4,150 crore in local manufacturing within a three-year window. In addition, the duty savings allowed per company will be capped at INR 6,484 crore or the actual investment made, whichever is lower.
While the government expects this to draw global players into India’s EV ecosystem, the eligibility thresholds are steep. Only firms with at least INR 10,000 crore in global automotive revenue and INR 3,000 crore in fixed asset investments can apply. The government argues this ensures only serious, well-established companies benefit, though it also limits participation to larger global firms and excludes smaller innovators.
To further ensure genuine localisation, the scheme mandates that companies must achieve 25 percent domestic value addition (DVA) within three years and 50 percent within five years. DVA will be monitored using standard procedures under the existing Production Linked Incentive (PLI) scheme and certified by authorised agencies. Investment on land is excluded, although buildings for the main plant and charging infrastructure can be partially considered within defined limits.
Applicants will also need to back their commitments with a bank guarantee equal to the duty savings or the minimum investment amount, whichever is higher. This guarantee must remain valid throughout the scheme period. The window for submitting applications is expected to open soon and will remain available until March 2026.
Union Minister H D Kumaraswamy highlighted the scheme’s importance at a press briefing, stating it strikes a necessary balance between encouraging high-tech imports and building local capacity. He added that the initiative not only supports India’s climate goals but also seeks to create employment and strengthen the economy through innovation-led growth.
While the policy is clearly aimed at attracting investment and improving India’s EV manufacturing capacity, its focus on high-value imports and limited number of beneficiaries may draw criticism for favouring multinational companies over Indian startups.
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