EV Policy Guidelines Expected in the Coming Weeks

The government is poised to unveil the guidelines for the forthcoming EV policy in the next 3 to 4 weeks, with expectations that it will be fully operational within the next few months. Sources aware of the matter reveal that the manufacturers have urged the government to broaden the definition of investment to include brownfield projects alongside greenfield ventures to avail benefits under the scheme.

Approved on March 15, the e-vehicle policy aims to position India as a manufacturing hub for EVs. Under the policy framework, companies establishing manufacturing facilities for e-vehicles will be permitted limited imports of vehicles at reduced customs duty rates. These companies are mandated to establish manufacturing facilities within India within three years and achieve a localization level of 50 percent within the fifth year.

An official privy to the matter, shared that while the OEMs (original equipment manufacturers) were asking if brownfields can be counted in the policy to get the benefits, theoretically it would not be possible to give benefits on the basis of brownfields and OEMs need to set up a separate factory to get the domestic valuation addition (DVA) of 25 per cent in the first three years.

The policy notification released earlier stipulates a minimum investment threshold of ₹4,150 crore ($500 million) for companies intending to establish manufacturing facilities in India and commence commercial production of EVs. There is no upper limit on investment.

To achieve the DVA level of 25 percent by the third year and 50 percent by the fifth year, the government has sanctioned a customs duty of 15 percent applicable to completely knocked-down (CKD) units for a duration of five years.

Industry experts note that only companies with completely knocked-down units (CBUs) would benefit under this policy. Established manufacturers such as Mercedes-Benz, BMW Group, Audi, Hyundai Motor, Jaguar Land Rover, and Volkswagen Group are expected to capitalize on the scheme. Additionally, newcomers like VinFast, which is establishing a facility in Tamil Nadu, and Tesla, which is currently exploring potential locations in the country, stand to gain from the policy incentives.

Source: BusinessLine

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