India has rolled out an all-new Flagship electric vehicle policy that aims to lure Global Automakers into making cars locally. The Government would soon start accepting applications under their new EV incentive program that was unveiled in March last year; The policy would slash the duty to 15% on any imported electric car that is priced around $35,000. The condition raised by the government is that if an automaker invests at least 14.5 billion rupees, or about $500 million, to set up a local plant within three years. After fulfilling such conditions manufacturers would be able to import about 8,000 cars yearly at the previous reduced rate.
While such incentives have been directed to bring in foreign manufacturers to produce in India, certain brands such as Tesla have sought different routes. Tesla has projected its plan to only sell imported vehicles in India through company owned outlets. Other manufacturers such as VinFast and others are already building a new factory in India even before the policy had kicked in.
Stringent Conditions For Manufacturers
Although the policy has been directed towards increasing the manufacturing duties in the nation, the stringent conditions set out by the Government could be concern for the manufacturers. Such conditions would include revenue targets, penalties for failing them. While the scheme is planned to incentivize FDI such restrictions can impact the policy roll-out for manufacturers.
The EV policy mandates a minimum revenue of Rs 5000 crore in the fourth year and Rs 7,500 crore a year later for any applicant approved under this policy. Manufacturers falling short would face a penalty of upto 3% on revenue gap. Applications would open as early as this month and extend March 15 the next year.
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