NEW EV POLICY (Syllabus: GS Paper 3 – Economy)

Context: The government of India announced the e-vehicle policy, which aims to promote the country as a leading manufacturing destination for EVs and attract investments from global EV makers.

EV Policy

• About: The policy is crafted to entice investments from renowned global EV manufacturers into the Indian market.
• Three-Year Establishment Window: A three-year grace period provided for establishing local manufacturing units for EVs.

oCurrently, India imposes hefty taxes ranging from 70% to 100% on imported cars, depending on their value.

• Domestic Component Stipulation: Requirement for at least 25% of components to be domestically sourced.
• Minimum Investment required: Rs 4,150 crore ($500 million).
• Maximum Limit: No limit on Investment.
• Timeline for manufacturing: 3 years for setting up manufacturing facilities in India, and to start commercial production of e-vehicles, and reach 50% domestic value addition (DVA) within 5 years at the maximum.
• Domestic value addition (DVA) during manufacturing: A localisation level of 25% by the 3rd year and 50% by the 5th year will have to be achieved.
• Custom Duty Applicability: 15% (as applicable to CKD units) would be applicable for a period of 5 years.
• Permissible Vehicle Value: Vehicles of CIF value of $35,000 or above will be permissible.
• Determination of EV Import: The total number of EVs allowed for import would be determined by the total duty foregone or investment made, whichever is lower, subject to a maximum of Rs 6,484 crore (equal to incentive under PLI scheme).
• Annual Import Limit: Not more than 8,000 EVs per year would be permissible for import under this scheme. The carryover of unutilised annual import limits would be permitted.