In a significant move toward promoting sustainable transportation, the Government of India has introduced a new policy to boost the local production of electric passenger vehicles. The initiative, titled the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), aims to position India as a global hub for electric vehicle (EV) manufacturing.
Launched under the leadership of Prime Minister Narendra Modi, the scheme supports India’s climate goal of achieving net-zero emissions by 2070 while encouraging industrial growth in the EV sector.
Key Features of the SPMEPCI Scheme
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Policy Announcement: The scheme was officially notified on March 15, 2024, by the Ministry of Heavy Industries (MHI).
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Import Duty Concessions: The Finance Ministry’s Revenue Department announced a 15% customs duty rate for electric cars with a CIF (Cost, Insurance, and Freight) value of $35,000 or more.
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Validity: The import duty concession is valid for five years.
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Import Quota: Companies can import up to 8,000 electric cars annually, with unused quotas carried forward to subsequent years.
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Incentive Limit: The maximum customs duty benefit is capped at ₹6,484 crore or the amount invested (minimum ₹4,150 crore), whichever is lower.
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Investment Requirement: Companies must invest a minimum of ₹4,150 crore (approx. $500 million) over three years.
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Local Value Addition (DVA):
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Minimum 25% domestic value addition within three years.
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50% DVA must be achieved within five years.
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DVA will be calculated as per the Production Linked Incentive (PLI) Auto Scheme.
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Eligible Expenses: Includes new plants, machinery, R&D, and utilities. Land costs are excluded. However:
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Building-related investment is capped at 10%.
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Charging infrastructure investment is limited to 5%.
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Bank Guarantee Requirement: Companies must submit a bank guarantee equal to either ₹4,150 crore or the total waived import duty, whichever is higher. This guarantee must remain valid for the full duration of the scheme.
Application Details
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Application Window: Will be open for at least 120 days and may be extended until March 15, 2026, if necessary.
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Application Fee: ₹5,00,000 (non-refundable)
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Eligibility Criteria:
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Global automotive revenue: Minimum ₹10,000 crore.
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Investment in fixed assets: Minimum ₹3,000 crore.
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During the official announcement, Union Heavy Industries Minister H.D. Kumaraswamy said, “This scheme will not only attract global electric vehicle manufacturers to invest in India, but will also encourage domestic innovation and production. It will strengthen the ‘Make in India’ and ‘Atmanirbhar Bharat’ campaigns, making India a key player in the global green mobility revolution.”
Tesla Not Planning Local Manufacturing—For Now
Despite the scheme’s incentives, Tesla has no immediate plans to manufacture its vehicles in India. Minister Kumaraswamy confirmed that while the company is preparing to launch its cars in the Indian market, local production is not currently in its plans.
Tesla has already secured a showroom location at Bandra Kurla Complex (BKC) in Mumbai and hired more than two dozen employees, including store and service staff. The company has also initiated the certification and homologation process required to sell vehicles in India.
Industry experts expect Tesla to debut its first model in the Indian market within the next two to three months.