Have you ever wondered how India plans to become a major player in the global electric car market? The country just launched an ambitious new program that could completely change how international car companies think about manufacturing here.
According to ObserverVoice, the Ministry of Heavy Industries announced the “Scheme to Promote Manufacturing of Electric Passenger Cars in India” on March 15, 2024.
What This New Program Actually Does
This scheme works like a special invitation to global car manufacturers, offering them significant benefits if they agree to build electric vehicles in India. Here’s what makes this particularly attractive:
- Lower import costs: Companies can bring in electric cars at just 15% customs duty instead of much higher rates, but only for cars worth at least $35,000 each
- Five-year protection: This reduced duty rate stays guaranteed for five full years once a company gets approved for the program
- Market testing opportunity: Foreign companies can sell imported cars while they build their local manufacturing facilities
- Technology transfer incentive: The program encourages companies to bring their latest electric vehicle technology to Indian factories and workers
The Money Requirements Explained
Getting into this program requires serious financial commitment. Companies must invest at least Rs 4,150 crore, which equals about $500 million in today’s money. This massive investment must go toward actual manufacturing equipment, new factory buildings, and research facilities.
The Financial Express reports that only companies earning more than Rs 10,000 crore globally can even apply for this program. Think of it like an exclusive club where only the biggest car manufacturers in the world can join and participate.
Timeline and Rules You Should Know
The program has strict deadlines that companies must follow. Here are the three most important requirements they must meet successfully:
- Quick start requirement: Companies must begin actual car production in India within three years of approval
- Local parts targets: They must use 25% Indian-made parts within three years, increasing to 50% within five years
- Financial guarantee: HDFC Sky notes that companies must provide a bank guarantee worth their entire customs duty savings as security deposit
| Before This Scheme | With New Scheme |
| High import duties made foreign electric cars very expensive for Indian buyers | Reduced 15% duty makes premium electric cars more affordable while factories are built |
| No major incentives for global manufacturers to invest in India | Clear financial benefits encourage long-term manufacturing commitments |
This program represents India’s strategic push to become an electric vehicle manufacturing hub. By requiring significant local production, the country aims to create thousands of new jobs while building expertise in clean transportation technology.
