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

News-CRUX-10     16th March 2024        
Samadhaan

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.
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