3rd June 2025 (13 Topics)

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EV Manufacturing Scheme

Context

The Government of India has notified detailed guidelines under the Scheme to Promote Manufacturing of Electric Passenger Cars in India. The scheme significantly lowers import duties on electric vehicles (EVs) for foreign manufacturers willing to invest in local EV production, aiming to boost domestic manufacturing capacity and attract global investment in the electric mobility sector.

Scheme Highlights:

Import Duty Reduction: Foreign manufacturers are allowed to import up to 8,000 completely built-up (CBU) EVs per year at a reduced customs duty of 15% (currently 70-100%), provided they meet investment and manufacturing commitments.
Minimum Vehicle Cost for Import: Only EVs with a minimum Cost-Insurance-Freight (CIF) value of $35,000 are eligible under this scheme.
Investment Requirement: OEMs must commit a minimum investment of ?4,150 crore in India’s domestic EV manufacturing sector.
Timeline and Localisation Norms:
- Manufacturers must begin domestic production within 3 years from approval.
- Local value addition must comply with phased manufacturing programme (PMP) guidelines over time.
Eligibility for Brownfield Investment: Unlike the earlier draft policy, the final guidelines allow both greenfield and brownfield investments, after pushback from existing domestic manufacturers.
Tenure of the Scheme: The concessional customs duty benefit will be available for 5 years from the date of approval.

Strategic Objectives:

Encourage technology transfer, boost Make in India, and reduce import dependence.
Improve affordability and accessibility of high-end EVs in the Indian market.
Develop a robust EV ecosystem involving domestic manufacturing, R&D, and skilled employment.

Institutional Oversight:

Administered by the Ministry of Heavy Industries (MHI).
Performance benchmarks will be monitored annually to ensure compliance.

Electric Vehicles (EVs):

Vehicles powered by electric motors instead of internal combustion engines (ICE).
Use energy stored in batteries, rechargeable via electricity.
Gaining global popularity due to concerns over carbon emissions, air pollution, and fuel dependency

Types of EVs:

Battery Electric Vehicles (BEVs):
- Fully electric; no internal combustion engine.
Zero tailpipe emissions.
- Rechargeable via external power sources.
Plug-in Hybrid Electric Vehicles (PHEVs):
- Combine electric motor with gasoline engine.
- Can be plugged in to recharge.
- Run on battery for limited range, then switch to fuel.
Hybrid Electric Vehicles (HEVs):
- Use both electric motor and fuel engine.
Cannot be externally charged.
- Battery charged via regenerative braking or ICE.

Advantages of EVs:

Zero tailpipe emissions ? Improved air quality and public health.
Lower fuel cost ? Electricity is cheaper than petrol/diesel.
Reduced noise pollution ? Silent electric motors.
Higher energy efficiency ? Up to 85% energy conversion vs 25–30% in ICE vehicles.
Low maintenance cost ? Fewer moving parts.

2024 EV Policy Highlights:

Allows import of up to 8,000 EVs/year at 15% import duty (vs 70–100%).
Applies to EVs priced ? $35,000 (CIF).
Investment requirement: ?4,150 crore in domestic manufacturing.
Companies must begin production within 3 years of approval.
Local value addition requirements apply.
Brownfield investments now eligible (new provision).

Major EV-Related Government Schemes:

FAME Scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles):
- Offers subsidies for electric 2W, 3W, 4W, and buses.
- Supports charging infrastructure development.
PLI Scheme (Production Linked Incentive):
- Covers Advanced Chemistry Cell (ACC) and Automobile & Auto Components.
- Incentivizes domestic EV and battery manufacturing.
National Mission on Transformative Mobility and Battery Storage:
- Promotes shared, connected, and clean mobility.
- Encourages Make-in-India in battery tech.

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