Centre Notifies Guidelines for Electric Car Manufacturing Scheme

The Ministry of Heavy Industries has issued detailed guidelines for the 'Scheme to Promote Manufacturing of Electric Passenger Cars in India,' aimed at attracting global electric vehicle (EV) manufacturers to set up production facilities in the country.

The scheme, first notified on March 15, 2024, is part of India’s broader efforts to become a global hub for electric mobility and meet its net-zero emissions target by 2070.

Under the scheme, approved applicants will be allowed to import Completely Built Units (CBUs) of electric four-wheelers with a minimum CIF value of USD 35,000 at a reduced customs duty rate of 15 percent for a period of five years. The maximum number of such vehicles allowed to be imported at the concessional rate is capped at 8,000 units per year. Unused quotas can be carried forward.

The total customs duty foregone under the scheme will be limited to the lower of INR 6,484 crore or the actual committed investment made by the applicant. The scheme mandates a minimum investment commitment of INR 4,150 crore within a three-year window, with no upper limit. Manufacturing operations are required to commence within three years of approval.

Applicants will also be required to meet domestic value addition (DVA) targets. A minimum DVA of 25 percent must be achieved within three years and 50 percent within five years. The assessment of DVA will follow the Standard Operating Procedure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components. Certification will be carried out by agencies approved by the Ministry of Heavy Industries.

The investment must be directed toward new plant, machinery, equipment, utilities, and engineering research and development. Expenditure on land will not be considered, though buildings used for manufacturing and utilities may be included up to 10 percent  of the total investment. Charging infrastructure investment will be allowed up to 5 percent.

A bank guarantee equivalent to either INR 4,150 crore or the total duty foregone, whichever is higher, must be submitted by applicants. The guarantee must remain valid for the duration of the scheme.

The application window will be open for 120 days from the date of the forthcoming notice. The Ministry may reopen the window as needed until March 15, 2026. A non-refundable application fee of INR 5 lakh will be required.

Eligibility criteria for applicants include a minimum global automotive revenue of INR 10,000 crore and a minimum global fixed asset base of INR 3,000 crore, based on the latest audited financial statements. Group companies must hold at least 26 percent voting rights in each other to be considered part of the same applicant group.

Union Minister H.D. Kumaraswamy said the scheme is designed to attract long-term investments, promote domestic manufacturing, and align with the Make in India and Aatmanirbhar Bharat initiatives.