VinFast's $2 billion Tamil Nadu investment won't qualify for India's electric vehicle sops
NEW DELHI: VinFast's ambitious $2 billion (Rs 16,000 crore) electric vehicle project in Tamil Nadu has hit a regulatory roadblock. Officials clarified Monday that the investment, already capitalized by the Vietnam-based EV maker, will not be eligible for benefits under India's newly announced Scheme to Promote Manufacturing of Electric Passenger Cars.
Why? The guidelines, released this week, mandate that only investments made after approval under the scheme will count toward incentives. "They (VinFast) have already capitalised the investment so they will not qualify based on that investment," an official told PTI. "They will have to make a fresh investment of Rs 4,150 crore to qualify."
VinFast, part of Vietnam's Vingroup, is setting up its India plant in Thoothukudi and is reportedly in talks with Andhra Pradesh and Telangana to expand further.
The company plans to launch its VF6 and VF7 models in India by the upcoming festival season and scale up production to 1.5 lakh EVs annually, part of a broader strategy to export to the Middle East and Africa.
While VinFast is now urging the Indian government to consider its prior investment, officials insist that equipment must be 'put to use' only after the date of scheme approval to be eligible. The application window for the scheme will open in the coming weeks and remain open for 120 days or more.
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Under the scheme, approved companies will also be allowed to import fully built electric four-wheelers (CBUs) priced above $35,000 at a concessional customs duty of 15% for five years.
Announced on March 15, 2024, the policy aims to woo global automakers while ensuring they commit significant fresh capital to local EV production. For VinFast, that means starting over, on paper, at least.
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