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The Hindu
3 days ago
- Automotive
- The Hindu
What is India's latest approach to localising EV manufacturing?
The story so far More than a year since it was announced, the Ministry of Heavy Industries Monday notified guidelines of the Scheme to Promote Manufacturing of Electric Passenger Cars in India. The scheme reduces existing duties on import of vehicles for overseas manufacturers from the present 70-100% to 15% subject to the maker meeting minimum requirements for investment and setting up facilities in the country. However, Union Minister H.D. Kumaraswamy indicating luxury EV maker Tesla's unwillingness to manufacture in India have prompted concerns about the promise of the scheme. Also Read | Centre notifies guidelines to boost electric car production What does the policy propose? At the centre of the notified policy is the provision to reduce customs duty on the import of ready-to-ship completely assembled electric four-wheelers to 15%. This would apply to all vehicles valued at $35,000 - circumscribing cost, insurance and freight (CIF) - for a period of five years. However, this would be subject to the manufacturer investing a minimum of ₹4,150 crore over the next three years. They would also be expected to build infrastructure and facilities to enable 25% of the overall manufacturing activity be undertaken domestically (domestic value addition, or DVA) within three years, and 50% within five years. MHI specifies that a maximum of 8,000 vehicles can be imported at the reduced duty rate in a year with no carrying over of unutilised limits. The maximum duty permitted to be foregone under the scheme has been capped at ₹6,484 crore. Broadly, the objective of the overall scheme is to find a midway point where affordability for a captive market is attained, whilst also recognising that import substitution would require a layered approach and a protracted timeline. MHI calculated that an imported vehicle valued at $35,000 (₹29.75 lakh) would now be liable to pay basic customs duty of ₹4.6 lakh at the reduced 15% rate compared to ₹20.8 lakhs at the erstwhile 70% rate. Therefore, combining with IGST levied at 5% on the resulting value, the total foregone duty amount to ₹17.2 lakh with the final landing cost coming to about ₹36 lakh. Now, in line with an initial investment of ₹4,150 crore and a foregone duty of ₹17.2 lakh for each vehicle, the maker would be allowed to import 24,155 units in total. EDITORIAL | Falling short: On India's EV journey But does this help our overall ecosystem? Shouvik Chakraborty, Assistant Research Professor at the Political Economy Research Institute at the University of Massachusetts Amherst (U.S.) argues that a domestic industrial policy aligned with a vision for future could be a step in the right direction. Although he holds the current policy would bode well for India only if there is sharing of technology with domestic automakers. Further, he observes, 'Countries these days are extremely cautious about transferring technology outside (to maintain their competitive advantage). In that light, India must not become a domestic hub for producing components of a vehicle.' Dinesh Abrol, adjunct faculty at the Transdisciplinary Research Cluster on Sustainable Studies at JNU in Delhi, observes that no foreign firm has ever helped build some other country's ecosystem. He attributed China and South Korea's ability to build manufacturing setups to their focus on skilling, research and development alongside undertaking innovation projects. 'This enabled conditions for a technology transfer and prompting companies to come and invest into the ecosystem,' he states. Essential to note, China as the leading manufacturer of EVs accounted for 70% of the global manufacturing in 2024. The other set of concerns relate to the potentially increased focus on four-wheeler EVs, and their probable impact on India's ambitions to achieve Net Zero by 2070. According to data compiled by the Federation of Automobile Dealers Association (FADA), EVs accounted for 7.8% of all vehicles sold in FY 2025. This was predominantly led by electric three-wheelers (at 57% in its category), followed by two-wheelers (6.1%), passenger vehicles (2.6%) and commercial vehicles (0.9%). Significantly, the International Energy Association (IEA) identified India as the world's largest market for electric three-wheelers in 2024. Sales grew about 20% YoY, it observed. Mr. Chakraborty emphasises that most Indians travel by public transport, and policies must also focus on building the same. 'Means of last mile connectivity, as bikes and shuttles, is also very important. It is not of much help if one has to walk few kilometres to avail public transport. This is not how we can fight climate change' he states. The final set of concerns relate to input costs. S&P Global Mobility observed in an analysis published March this year that high initial costs, typically 20-30% higher than ICE counterparts, coupled with India's reliance on imported components and batteries 'hinder' the growth of the EV sector. It held notwithstanding government efforts to promote localisation through varied policies, the rate was 'not increasing as expected'. DATA | Union Budget 2025: Allocation for electric mobility schemes rise by 20% What about our industrial ambitions in the EV space? Other than the impact on the ecosystem, concerns in the realm extend to costs and competitiveness. Reuters had reported in December 2023 about Tata Motors opposing Tesla's proposal to lower import duties. It had argued, according to the report, lowering duties would 'vitiate' the investment climate which was premised around expectations of the tax regime favouring locals remaining unchanged. The automaker had further held that India's EV players required more government support in the early growth stage of the industry. According to IEA's EV Outlook, domestic OEMs accounted for more than 80% of the electric cars produced domestically in 2024. Additionally, it attributed a less than 15% share of Chinese imports in the country's EV sales in 2024 to high import duties on EVs and the availability of locally made, affordable electric models. Thus, the lowering of duties prompt concerns about the potential impact (though not potentially from China) on domestic industries. According to Mr. Abrol, the policy is premised around foreign-capital and is export-focussed. He suggested the policy should instead be oriented toward building local ecosystem and spurring research and development alongside innovation. Mr. Abrol holds the lack of availability of skilled persons is due to the missing contribution of the public sector. Mr. Chakraborty further states, by nature western technologies in general are more capital-intensive than those in labour-intensive economies. 'Even if it is export-oriented, it will create jobs in an area,' he states, adding, 'However, the overall context needs to be considered in terms of how many jobs it is displacing, this is also considering that EVs have less conventional parts than a gasoline-powered vehicle.'
Mint
5 days ago
- Automotive
- Mint
Government supports all green mobility, says heavy industries minister Kumaraswamy
New Delhi: Union heavy industries and steel minister H.D. Kumaraswamy has weighed in on the automotive industry's concerns about state governments equating hybrid and electric car incentives, stating that the government continues to support all clean fuel for automobiles. He said the government has incentivized hybrid cars under subsidy schemes such as FAME II, and hybrid ambulances under PM E-drive. In addition, under the PLI-Auto scheme, the government supports all kinds of fuels besides EVs, including CNG, LNG and biofuels. "Under the FAME-II Scheme, EV (electric vehicles) and hybrid version of e-4W was allowed for incentivization. Similarly, in case of PM E-drive scheme, a hybrid version of e-ambulances, that is, electric plug-in hybrid & strong hybrid shall be incentivized," said Kumaraswamy in an email interview with Mint. Also read: Ola Electric's founder Bhavish Aggarwal pays ₹20 crore to top up collateral as shares slide "Further, besides EV, the government supports all kind of fuels viz. CNG, LNG, and bio-fuels under the PLI Auto Scheme," he added. FAME, or Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles scheme, ran for two iterations from FY15 to FY19, and from FY20 to FY24. Currently, the PM E-drive scheme has replaced the FAME schemes. Under all these schemes, consumers could purchase electric vehicles at a subsidized price. The government then reimbursed manufacturers the difference. PLI-Auto is a ₹25,938-crore production-linked incentive scheme for automobiles and automotive components, announced in 2021. It provides incentives to automakers to manufacture vehicles that run on green fuel. Mint reported on 29 May that leading electric car makers Tata Motors Ltd, Mahindra and Mahindra Ltd and Hyundai Motor India Ltd are up in arms over the Delhi government's draft paper proposing equal incentives for hybrid cars and electric vehicles. On the issue of supply disruptions of rare earth magnets from China, the minister said the automotive industry has sought help from MHI, and that "MHI and the government of India" are actively working with industry stakeholders to understand the issue and find solutions. Kumaraswamy also said battery makers in the country have faced hurdles in meeting timelines under the production-linked incentive scheme for advanced chemical cells (PLI-ACC) due to unavailability of technology, skilled manpower, and upstream components, besides challenges in importing essential equipment and machinery. He clarified however, that by 2030, India will have indigenous ACC capacity of over 100 gigawatt-hours. Also read: Rahul Jacob: Manufacturing is crying out for a reality check "However, with support and hand holding M/s Ola Cell Technologies Private Limited (OCTPL) has reported successful installation of 1.4 GWh capacity," said the union minister. "Apart from the PLI beneficiary firms more than 10 companies have already started setting up cell manufacturing unit for more than 100 GWh capacity," he added. The problem echoes similar challenges faced by India's PLI scheme for solar modules, as Mint reported on Monday. The ₹18,100-crore PLI-ACC scheme was introduced in May 2021 to incentivize setting up of 50 gigawatt-hours of battery storage capacity. Three companies -- Rajesh Exports Ltd, Ola Electric Mobility Ltd, and Reliance Industries Ltd -- have been awarded 40 gigawatt-hour of storage capacity till date. This means the companies will receive benefits to set up every unit of battery capacity. Indian manufacturers are capitalizing on the heightened demand for cell components like Cathode active materials, Anode active material, aluminium and copper foils, with many companies setting up component manufacturing units in India to achieve higher value addition and strengthen supply chains. The ministry of heavy industries, which is also the nodal ministry for the PLI-Auto scheme, is expecting claims worth about ₹2,000 crore from the industry in FY26. Under the scheme, manufacturers have to claim incentives for the sales of zero-emission vehicles or other eligible components achieved in a fiscal year, in the following year. For instance, benefits for FY25 sales under the PLI-Auto scheme will be claimed and disbursed in FY26. Also read: India bulks up its drugs PLI scheme in renewed pushback against Chinese imports The expectation for FY26 claims come after a disbursal of ₹322 crore in FY25 to four manufacturers. This time, the minister said the government was expecting nine manufacturers to claim incentives under the PLI-Auto scheme. "Disbursal of incentive under PLI Auto is expected to increase over the years as the number of applicants achieving DVA certification increases as applicants are able to achieve localization as per scheme guidelines. Further, the applicants are expected to achieve DVA certification for more number of AAT products and variants. As more number of OEMs are likely to achieve DVA under the scheme in the coming years, the disbursal will rise in coming years," said Kumaraswamy. In FY26, state-run Bharat Heavy Electricals Ltd (BHEL) will aim to increase its revenue by 20-25% and double it's profits on the back of its existing orderbook of Vande Bharat trains, navy gun mounts, transmission lines, coal gasification projects, and boilers, the minister said. "In the current fiscal, BHEL is focused on consolidating project execution before expanding into newer domains," said the minister. 'We want BHEL to focus on delivery discipline first. Diversification into non-power sectors rail transport, defence systems, transmission and coal gasification will continue, and in some years, will contribute significant percentage of revenue." BHEL is also set to become the nodal agency for demand aggregation of electric vehicle charging infrastructure, and will develop an application to facilitate charging services, Mint reported on 21 May. On 2 June, the ministry notified the guidelines for the scheme to promote the manufacturing of electric passenger cars in India (SPMEPCI), which was launched in March 2024. The scheme allows foreign electric carmakers to import completely built-up units of their vehicles at a reduced import duty, in exchange for investing at least ₹4,150 crore towards manufacturing electric cars in India. They will be allowed to import 8,000 cars every year for five years at an import duty of 15%, as opposed to the 70% levy on imports otherwise. But electric carmakers have to achieve localization of 25% in three years, and 50% localization in five years to qualify for benefits under the scheme. Investments also have to be made in plant and machinery, electric vehicle charging systems, or research and development. American electric vehicle maker Tesla Inc. has not shown interest in the scheme yet, Kumaraswamy had said on 2 June in a press conference. But other manufacturers including Mercedes Benz, Hyundai, Kia, and Skoda-Volkswagen had shown interest in the scheme, he said.
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Business Standard
03-06-2025
- Business
- Business Standard
Battery storage PLI scheme likely to be tweaked to add more sectors
As of now, the plan is to extend coverage to all sectors or all aspects of batteries like data centres, telecom towers, power backups, etc Puja Das New Delhi Listen to This Article The production-linked incentive (PLI) scheme for the remaining part of a national programme on battery storage, especially with some specialised applications, may be changed to attract more sectors and create demand, according to two persons in the know. The Ministry of Heavy Industries (MHI) and the Ministry of New and Renewable Energy (MNRE) are working on the programme titled 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage' for the remaining 10 GwH capacity of the 50 GwH target, especially for grid-scale stationary storage (GSSS) applications. As of now, the plan is to extend coverage to all sectors or all aspects
NDTV
03-06-2025
- Automotive
- NDTV
Elon Musk's Tesla "Not Interested" In Manufacturing In India: Minister
New Delhi: Tesla, the Elon Musk-owned electric vehicle giant, is not interested in manufacturing in India and is keen on opening showrooms, Union Minister for Heavy Industries HD Kumaraswamy said on Monday. The remarks came amid the government's push to promote domestic manufacture of passenger cars, with a special focus on electric vehicles (EVs). " are only to start showrooms. They are not interested in manufacturing in India," the minister said. Heavy Industry Secretary Kamran Rizvi, however, added, "The real intent we'll know when we open the application". "If the company still feels like investing. What the minister is telling is about what come and tell informally," he said. The minister added that many European companies like Hyundai, Mercedes Benz, Skoda and Kia have shown interest in manufacturing units in India under the new EV policy. Earlier, there were reports that Tesla was interested in importing Tesla cars into India and subsequently selling them through their showrooms in India. Tesla boss Musk had in the past indicated that he was interested in investing in India, but "high import duty" structures were a bone of contention. Tesla's intention to come into India had intensified after India announced its new EV policy, under which import duty was reduced to 15 per cent and many incentives were provided for setting up a manufacturing plant in India. Meanwhile, Elon Musk's father, Errol Musk, who is in India, appeared keen on Tesla's presence in the country. "That is something that I have to be careful not to say too much about. Tesla is a public company. It's not you look at India and the population, the kind of people you've got here, the energy and everything and when I hear that, with great respect, BYD and various others are coming in, and Tatas and Mahindra are making great cars, I'm very inclined to say, wait, why aren't we having Teslas here. But I can't say too much. That's just a personal point of view," he said. He was answering a query about plans for Tesla's presence in India. The central government on Monday notified guidelines for the Scheme to Promote Manufacturing of Electric Passenger Cars in India. The central government approved a forward-looking scheme to promote the domestic manufacture of passenger cars, with a special focus on electric vehicles (EVs). The initiative is aligned with India's national goals of achieving net zero by 2070, fostering sustainable mobility, driving economic growth, and reducing environmental impact. It is designed to firmly establish India as a premier global destination for automotive manufacturing and innovation. Ministry of Heavy Industries (MHI) has issued a notification regarding detailed guidelines for the "Scheme to Promote Manufacturing of Electric Passenger Cars in India" (SPMEPCI / the Scheme)MHI had issued the Scheme notification on March 15 2024. The Department of Revenue also issued the notification on March 15, 2024, for reduced import duties in line with the provisions of the scheme. The notice for inviting applications under the Scheme is proposed to be notified shortly, whereby the prospective applicants would be able to submit online applications. The scheme shall help to attract investments from global EV manufacturers and promote India as a manufacturing destination for e-vehicles. The Scheme will also help put India on the global map for manufacturing of EVs, generate employment and achieve the goal of "Make in India". To encourage the global manufacturers to invest under the Scheme, the approved applicants will be allowed to import Completely Built-in Units (CBUs) of e-4W with a minimum CIF value of USD 35,000 at reduced customs duty of 15% for a period of 5 years from the Application Approval Date. Approved applicants would be required to make a minimum investment of Rs 4,150 crore in line with the provisions of the scheme.
India Gazette
02-06-2025
- Automotive
- India Gazette
Tesla not interested in manufacturing in India, says Kumaraswamy; government issues guidelines for domestic EV manufacturing
New Delhi [India], June 2 (ANI): Tesla, the Elon Musk-owned electric vehicle giant, is not interested in manufacturing in India and is keen on opening showrooms, Union Minister for Heavy Industries HD Kumaraswamy said on Monday. The remarks came amid government's push to promote domestic manufacture of passenger cars, with a special focus on electric vehicles (EVs). ' are only to start showrooms. They are not interested in manufacturing in India,' the minister said. Heavy Industry Secretary Kamran Rizvi, however, added 'the real intent we'll know when we open the application'. 'If the company still feels like investing. What the minister sir is telling is about what come and told informally,' he said. The minister added that many European companies like Hyundai, Mercedes Benz, Skoda and Kia have shown interest in manufacturing units in India under the new EV policy. Earlier, there were reports that Tesla was interested in importing Tesla car into India and subsequently sell it through their showrooms in India. Tesla boss Musk had in the past indicated that he was interested in investing in India, but 'high import duty' structures were a bone of contention. Tesla's intention to come into India had intensified after India announced its new EV policy, under which import duty was reduced to 15 per cent and many incentives were provided for setting up manufacturing plant in India. Meanwhile, Elon Musk's father Servotec's Errol Musk, who is in India, appeared keen on Tesla's presence in the country. 'That is something that I have to be careful not to say too much about. Tesla is a public company. It's not you look at India and the population, the kind of people you've got here, the energy and everything and when I hear that, with great respect, BYD and various others are coming in, and Tatas and Mahindra are making great cars, I'm very inclined to say, wait, why aren't we having Teslas here. But I can't say too much. That's just a personal point of view,' he said. He was answering a query about plans for Tesla's presence in India. The central government on Monday notified guidelines for the Scheme to Promote Manufacturing of Electric Passenger Cars in India. The central government approved a forward-looking scheme to promote the domestic manufacture of passenger cars, with a special focus on electric vehicles (EVs). The initiative is aligned with India's national goals of achieving net zero by 2070, fostering sustainable mobility, driving economic growth, and reducing environmental impact. It is designed to firmly establish India as a premier global destination for automotive manufacturing and innovation. Ministry of Heavy Industries (MHI) has issued a notification regarding detailed guidelines for the 'Scheme to Promote Manufacturing of Electric Passenger Cars in India' (SPMEPCI / the Scheme)MHI had issued the Scheme notification on March 15 2024. The Department of Revenue also issued the notification on March 15, 2024 for reduced import duties in line with the provisions of the Scheme. The Notice for inviting applications under the Scheme is proposed to be notified shortly, whereby the prospective applicants would be able to submit online applications. The scheme shall help to attract investments from global EV manufacturers and promote India as a manufacturing destination for e-vehicles. The Scheme will also help put India on the global map for manufacturing of EVs, generate employment and achieve the goal of 'Make in India'. To encourage the global manufacturers to invest under the Scheme, the approved applicants will be allowed to import Completely Built-in Units (CBUs) of e-4W with a minimum CIF value of USD 35,000 at reduced customs duty of 15% for a period of 5 years from the Application Approval Date. Approved applicants would be required to make minimum investment of Rs. 4,150 crore in line with the provisions of the scheme. (ANI)
