In Short : India is set to enhance incentives for electric vehicle (EV) manufacturing, aiming to attract global and domestic players following Tesla’s decision to withdraw plans for a local factory. The government plans to expand the Production-Linked Incentive (PLI) scheme, focusing on EV components, battery technology, and local manufacturing to bolster its green mobility goals and reduce import dependence.
In Detail : India plans to expand electric vehicle incentives to automakers manufacturing models at existing factories in the country, instead of limiting the benefits to those willing to build new plants, a source revealed.
India’s EV policy, was originally designed to encourage US automaker, Tesla to enter the market and manufacture locally but the company backed off from those plans earlier this year.
Other foreign automakers have shown interest in making EVs in India after meeting the new criteria, according to minutes of a meeting with the Ministry of Heavy Industries that was seen by Reuters. The changes to the policy is expected to encourage EV investment from the likes of Toyota and Hyundai, the source added.
Latest EV policy
Under the policy announced in March, an automaker investing at least $500 million to manufacture EVs in India with 50 per cent of components sourced locally will get a huge cut on import taxes – a drop to 15 per cent from as high as 100 per cent for up to 8,000 electric cars per year.
The government will now also consider EV investments at existing factories that currently build gasoline-engine and hybrid cars, said the source.
The electric models must, however, be built on a separate production line and meet the local sourcing criteria, the source added. For a new factory, investment in machinery and tools to build EVs will be counted in full towards the $500 million requirement even if the equipment is also used to manufacture other types of cars, he said.
To ensure automakers are treated fairly, the government will set a minimum EV revenue target for a plant or a production line which must be met to qualify for the scheme, the source said, adding that the policy would be finalised by March.
According to the minutes of the meeting, Toyota officials asked if the EV policy would allow for investing in a separate assembly line within a plant that produces multiple powertrains. It also sought to understand if the manufacturing and installation of charging stations would be counted as part of the $500 million investment requirement. However, Toyota and the Heavy Industries Ministry did not respond to Reuters requests for comment.
Hyundai asked if the money spent on research and development could be counted as part of the $500 million investment requirement, the minutes showed. As per the source, it would not be counted.
Hyundai Motor India is awaiting the rollout of the final policy and guidelines, a spokesperson said.
Volkswagen’s India unit wanted more leeway with the investment timeframe. It asked if 75 per cent of the $500 million could be invested in the first three years of the five-year scheme, instead of 100 per cent required now. It also sought to understand if investments by suppliers would qualify, the minutes showed.
Volkswagen said it is studying the latest EV policy “in detail” and would evaluate a way forward accordingly.