Context

India’s new EV policy, announced recently, allows imports from any country, including China.

1: Dimension- The new Indian EV policy

• Investment: The updated policy mandates automakers to invest a minimum of USD 500 million in India within three years, establishing local EV manufacturing facilities with 25% domestically sourced components.
• Reduced duty: Eligible carmakers can import up to 8,000 EVs annually with a 15% reduced import duty for vehicles priced at USD 35,000 and above. This aligns with the Indian government’s “Atmanirbhar Bharat” initiative, fostering self-reliance and technological advancement.
• Domestic Value Addition (DVA): The policy lays emphasis on Domestic Value Addition (DVA), aiming for a minimum of 50% DVA within five years.
  • This reduces reliance on imports, stimulates job growth and promotes technological innovation in the Indian EV sector, supporting indigenous manufacturing.
• Accountability: Additionally, the policy ensures accountability by requiring companies to back investment pledges with bank guarantees.
• Non-compliance with DVA and investment criteria will lead to enforcement of guarantees, enhancing transparency and accountability.

2: Dimension- Implications of the strategy:

• Attracting global manufacturers: The Indian government aims to create policies that attract all EV manufacturers globally to establish operations in India, leveraging the country’s expanding economy.
• Ripple effect for economy: The goal is not just to attract these big players but to leverage their presence and create a ripple effect, fostering a network of smaller, specialized domestic suppliers for a robust and self-sustaining industrial ecosystem.
• Interest of domestic manufacturers: Domestic players such as Tata Motors and Mahindra & Mahindra had expressed concerns about increased competition from globally popular EVs, especially China.