New: Policy on E-Vehicles-Scheme to promote manufacturing of electric passenger cars in India
Central Government approves E-Vehicle policy to Promote India as a Manufacturing Destination for e-vehicles.
Under the new policy, foreign E-vehicle manufacturer wanting to launch their vehicles in Indian market, can import their cars at a concessional customs duty of 15% subject to terms and conditions. The objective behind the introduction of this scheme is to promote India as a manufacturing destination for e-vehicles with latest technology.
At present, import of Completely built unit (CBU) ie fully built car, attracts import duty ranging from 70% to 100% depending on their engine size and CIF value.
As per the new policy, imports of car with CIF value of USD 35000 or more are allowed at concessional rate of 15% duty subject to following commitments by the EV maker:
1. Setting up manufacturing facility in India for manufacture of electric four wheelers(e-4W), with minimum Investment of at least USD 500 Million (which is approx. ₹ 4150 crores) and there is no upper cap on the amount of maximum investments
2. Conditions regarding set up of facility: The Manufacturing facility so established will have to be made operational within 3 years of date of issuance of approval letter by ministry of heavy industries (MHI)
3. Implying that they have to start commercial production of e-vehicles within 3 years and achieve localization ie Domestic value addition (DVA) level of 25% by the 3rd year and 50% domestic value additions within maximum period 5 years from the date of issuance of approval letter by MHI. (DVA: Implies Goods and services sourced from domestic sources across the supply chain). This is being done to promote the Make in India campaign and boost domestic manufacturing of advanced automotive products.
4. This concessional customs duty of 15% (as was applicable to CKD units) would be applicable to the import of CBU electric four wheelers(e-4W), for a period of 5 years from the date of issuance of approval letter by the government subject to aforesaid conditions.
5. Maximum number of Electric Four wheelers (e-4W) that would be permissible for import under this concessional rate scheme for the said period of 5 years, is capped at 8000 nos. per year. However, carryover of unutilized annual import limits would be permitted.
6. Also note that maximum number of e-4W imported under this scheme will be subjected/limited to the total duty foregone because of this concessional rate scheme
Total duty foregone will be limited to either
a) Rs.6,484 Crore /per applicant OR
b) investments made by the applicant (In Rs.Crores)
whichever is lower.
Number of vehicles(ceiling)=calculated total duty foregone (In Rs)/ Duty foregone Per EV
7. The Investment commitment made by EV manufacturer, will have to be backed up by a bank guarantee from scheduled commercial bank in India amount, in lieu of customs duty foregone.
8. This Bank guarantee will be invoked, in case of non-fulfilment of domestic value added and minimum investment criteria defined under the scheme guidelines.