The Ministry of Heavy Industries has released detailed guidelines for the “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI), originally announced on March 15, 2024.
Approved earlier this year, the scheme permits selected applicants to import completely built electric four-wheelers (CBUs) with a minimum CIF value of USD 35,000 at a reduced customs duty rate of 15% for a period of five years. In exchange, companies must commit to investing at least ₹4,150 crore (approximately USD 500 million) in setting up local manufacturing operations.
Under the scheme, firms are required to achieve a domestic value addition (DVA) of at least 25% within three years and 50% within five years, in line with benchmarks set by the PLI Auto Scheme. The total financial benefit any company can receive is limited to the lower of either the committed investment amount or ₹6,484 crore in total customs duty foregone.
The newly released guidelines provide comprehensive operational details and officially open the application process. A formal Notice Inviting Applications is expected soon, initiating a 120-day window—or longer—for interested companies to submit their applications online.
Investment criteria specify that only expenditure on new plant and machinery, R&D, equipment, and eligible building costs (within prescribed limits) will be considered. Land costs are not counted, and investments in charging infrastructure are capped at 5% of the total committed investment.
To ensure only well-established players qualify, applicants must demonstrate minimum global automotive revenues of ₹10,000 crore and global fixed assets of at least ₹3,000 crore.
Ajay Srivastava, Founder of the Global Trade Research Initiative, welcomed the guidelines but noted that implementation would take time. “While the release of the scheme’s guidelines is a positive development, the application process has yet to begin. It could take another six months or more before approvals are granted, and the rollout of locally manufactured EVs under this scheme will follow thereafter. Until then, approved companies can continue importing fully built units at the reduced duty rate,” he said.
He added that major domestic automakers like Tata Motors and Mahindra & Mahindra are likely to meet the criteria but will still need to invest in new facilities to fully benefit. On the other hand, newer EV players such as Ola Electric, Ather Energy, Bajaj Auto, Wardwizard, and EKA Mobility may struggle to qualify due to the stringent eligibility requirements.
Meanwhile, the recently concluded India-UK Free Trade Agreement (FTA) is set to reduce import duties on premium electric vehicles from the UK from over 100% to just 10% over the next few years.
“Any substantial investment in India’s EV sector must consider not only domestic policy incentives but also the changing dynamics created by FTAs with the UK, USA, and EU, which are reshaping competition in the Indian market,” Srivastava added.
Speaking at a press briefing earlier today, Union Minister for Heavy Industries H.D. Kumaraswamy described the scheme as a strong indicator of the government’s commitment to green growth and industrial transformation under Prime Minister Narendra Modi’s leadership.
“India is making decisive progress towards achieving net zero emissions by 2070, while aligning economic growth, technological advancement, and job creation,” Kumaraswamy stated.
He also emphasized that participating companies must furnish a bank guarantee equal to the higher of ₹4,150 crore or the total amount of customs duty exemption availed during the scheme’s tenure. This guarantee must remain valid throughout the duration of the scheme and will serve as a safeguard to ensure compliance with the investment and localisation requirements.
