India Launches EV Manufacturing Scheme with ₹4,150 Cr Investment Mandate

In a landmark policy move designed to transform India into a global hub for electric vehicle (EV) production, the Government of India has officially approved and notified the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). Spearheaded by the Ministry of Heavy Industries (MHI) and backed by the Department of Revenue, the scheme is a core component of India’s push toward sustainable mobility and self-reliance in the electric mobility sector.

This strategic initiative aligns closely with Prime Minister Shri Narendra Modi’s vision of Net Zero by 2070, and the broader goals of Make in India, Atmanirbhar Bharat, and green economic growth.

A Visionary Framework for EV Manufacturing

Unveiled through an official notification dated March 15, 2024, the SPMEPCI scheme aims to attract substantial investments from global EV giants and domestic manufacturers alike. The scheme offers a range of incentives, notably reduced customs duties for a fixed period, conditional upon significant investment in domestic EV manufacturing.

Union Minister Shri H.D. Kumaraswamy, in a press briefing, called the scheme “a forward-looking, balanced policy designed to introduce world-class electric vehicle technology into the Indian market while nurturing domestic capabilities.” He emphasized its role in positioning India as a serious contender in the global EV supply chain.

Key Benefits and Incentives

Under the scheme, approved applicants will be permitted to import Completely Built-up Units (CBUs) of electric four-wheelers (e-4Ws) valued at a minimum CIF (Cost, Insurance, and Freight) of USD 35,000 at a concessional customs duty rate of 15%, compared to the standard 70% rate.

This benefit is available for five years from the date of application approval. However, several strict conditions apply:

• A maximum of 8,000 vehicles per year can be imported at the reduced rate.

• Unused import allowances from one year may be carried over.

• The total customs duty benefit per applicant is capped at the lower of ₹6,484 crore or the committed investment made by the applicant under the scheme.

Investment Requirements and Timelines

To qualify for participation, companies must commit to a minimum investment of ₹4,150 crore (approx. USD 500 million) within three years from the Application Approval Date. There is no upper limit on the investment, encouraging large-scale and long-term manufacturing commitments.

The company must:

• Set up a manufacturing facility and commence production of eligible e-4Ws within three years.

• Achieve 25% Domestic Value Addition (DVA) within 3 years.

• Meet a minimum 50% DVA within 5 years of scheme approval.

DVA compliance will be certified by testing agencies approved by MHI and assessed based on the Standard Operating Procedures (SOP) outlined under the PLI Auto Scheme.

Eligible Expenditures

Investments under this scheme must be directed toward new infrastructure and capabilities, including:

• Plant, Machinery, Equipment, and Associated Utilities

• Engineering, Research, and Development (ER&D)

• Buildings, provided they do not exceed 10% of the total committed investment

• EV charging infrastructure, up to a maximum of 5% of the total investment

Land acquisition costs are excluded, reinforcing the scheme’s intent to promote direct manufacturing investments.

For brownfield projects, clear physical demarcation of new investments from existing facilities is mandatory.

Bank Guarantee and Compliance

Each approved applicant must submit a Bank Guarantee from a scheduled commercial bank in India. The guarantee must be equal to the higher of either the total duty to be foregone or ₹4,150 crore, and remain valid throughout the scheme period.

This measure ensures accountability for achieving the committed investment and DVA milestones, while safeguarding public resources.

Application Process and Eligibility

The Notice Inviting Applications (NIA) will be released shortly on the Ministry of Heavy Industries’ website, opening a 120-day (or more) window for interested companies to apply online. The ministry reserves the right to reopen the application window up to March 15, 2026.

Each applicant must pay a non-refundable application fee of ₹5,00,000.

To be eligible for the scheme, applicants must meet two key financial thresholds:

1. Global group revenue from automotive manufacturing must be at least ₹10,000 crore, based on the latest audited financials.

2. Global investment in fixed assets (gross block) must be a minimum of ₹3,000 crore, again based on the latest audited data.

These criteria ensure that only serious and capable players with proven track records in automotive manufacturing can access the scheme's benefits.

A Strategic Leap Toward Green Mobility

The scheme is seen as a major policy innovation to balance the introduction of advanced electric mobility technologies while developing local supply chains, jobs, and engineering expertise. By mandating phased domestic value addition, it avoids the pitfalls of import dependency and accelerates the transition to homegrown, high-quality EVs.

Minister Kumaraswamy stated:

“Through calibrated customs duty concessions and clear DVA targets, we are ensuring that global investment leads to Indian capability. This is not just about importing EVs; it’s about making India a hub for clean automotive innovation.”

Looking Ahead

As India continues to battle environmental challenges and push toward a sustainable transport economy, the SPMEPCI scheme represents a robust government-industry partnership model. It encourages cutting-edge innovation, builds on India’s manufacturing prowess, and lays the foundation for long-term economic and environmental dividends.

With global EV manufacturers expected to respond positively, the next few months could usher in new alliances, groundbreaking factory developments, and thousands of green jobs, furthering India's global leadership in clean and future-ready transportation.