Revised EV investment guidelines for foreign investors
The Indian government is preparing to release fresh investment guidelines under its newly approved electric vehicle policy, with significant implications for foreign EV manufacturers. The guidelines will introduce more stringent scrutiny for proposals from countries sharing land borders with India, such as China.
A government official disclosed that auto companies from these neighbouring countries will undergo “much more onerous scrutiny” compared to others. However, those already operating in India will not be required to establish new subsidiaries to apply under the new policy.
The forthcoming guidelines will provide detailed information on portal links and the project monitoring agency. Companies will be allowed to apply for an import license for a specified number of EVs, contingent upon their commitment to the investment levels set by the policy.
The new EV policy, approved on 15th March, 2024, mandates that companies invest a minimum of Rs. 4150 crores within three years. This investment is aimed at establishing a local manufacturing unit for EVs with at least 25% localisation.
Moreover, the policy offers an incentive for companies to import up to 8000 EVs per year at a reduced import duty of 15% for cars priced at $35,000 and above. This is a significant reduction from the current import duty rates, which range between 70% and 100%.
The introduction of these guidelines marks a strategic effort by the Indian government to bolster domestic EV manufacturing while maintaining a cautious stance towards investments from certain neighbouring countries. As the global EV market continues to expand, these measures are expected to shape the landscape of EV production and sales in India.
Tesla will soon enter the Indian market by introducing some of their cars via CBU route. Later, the American EV maker plans to produce a mass market EV locally that will be priced around Rs. 25 lakhs.
