India slashes EV import duties to 15% to attract global carmakers

India Today

a day ago

In a major move to boost electric vehicle (EV) manufacturing and adoption, the Ministry of Heavy Industries has unveiled a new policy titled 'Scheme to Promote Manufacturing of Electric Passenger Cars in India' (SPMEPCI). The initiative significantly reduces import duties on electric vehicles from 110 per cent to just 15 per cent, aiming to lure global automakers into investing in India's EV ecosystem.advertisementInvestment-driven incentivesTo benefit from the reduced import tariff, automakers must commit to investing at least Rs 4,150 crore (approximately $500 million) within three years toward manufacturing electric cars in India. The policy allows manufacturers to use existing production facilities, although previous investments and land/building costs are not counted towards the mandatory investment threshold.In return, the reduced 15 per cent customs duty will apply for a five-year period, capped at 8,000 imported electric vehicles annually—provided each unit is priced above $35,000 (approx Rs 30 lakh). The annual quota is flexible, allowing carryover of unused units, and total benefits are limited to Rs 6,484 crore or the actual investment made—whichever is lower.Manufacturing targets and milestones
Participating carmakers must meet a series of performance targets, including:Annual turnover of Rs 2,500 crore by the second year,Rs 5,000 crore by the fourth year, andRs 7,500 crore by the fifth year.In addition, companies must:Set up local manufacturing facilities by the third year,Achieve 25 per cent local value addition by the third year, andIncrease this to 50 per cent by the fifth year.advertisementAllowable investment expenses include R&D, machinery, and charging infrastructure (up to 5 per cent of the total investment). Land and buildings used directly for manufacturing can account for up to 10 per cent.Heavy Industries Minister HD Kumaraswamy confirmed that several global automakers—Hyundai, Kia, Mercedes-Benz, Skoda, and Volkswagen—have already expressed interest in availing the scheme's benefits.However, Tesla is unlikely to participate in local manufacturing. Despite its long-awaited entry into the Indian market in 2025, the American EV company reportedly plans only to open showrooms and import vehicles—making its offerings subject to the full 110 per cent import duty."Tesla is not expected to invest in manufacturing here. They are likely to begin with showrooms only,' Kumaraswamy said.Eligibility requirementsTo apply for the scheme, carmakers must meet the following global financial benchmarks:A minimum of Rs 10,000 crore in annual automotive revenueAt least Rs 3,000 crore in fixed assets.An online portal for SPMEPCI applications is expected to go live soon, with approval letters to be issued from August 2025 onwards.Subscribe to Auto Today Magazine