New Delhi, May 2, 2025: The Ministry of Heavy Industries of the Government of India announced the guidelines for its new investments in the production of electric passenger cars, known as the “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI), and offered import duty concessions totalling Rs 6,484 crore, or roughly $780 million.
The government of India has announced that automakers who commit to investing at least $500 million over the next three years will be able to import a limited number of high-end electric vehicles at a slashed customs duty rate of 15%—down from the current rate of about 70%—as part of its efforts to draw in international automakers and establish itself as a major hub for the production of electric vehicles (EVs).
The incentive will be in place for five years after it is approved and applies to electric four-wheelers (e-4Ws) that cost $35,000 or more on a cost-insurance-freight (CIF) basis. The maximum quantity of automobiles that can be imported under this concession is 8,000 per year.
During a press briefing, Union Minister for Heavy Industries H.D. Kumaraswamy stated that the programme “aligns with India’s national goals of achieving Net Zero by 2070, fostering sustainable mobility, driving economic growth, and reducing environmental impact.” The strategic tool, according to him, is intended to “firmly establish India as a premier global destination for automotive manufacturing and innovation.”
The scheme’s requirement for local value addition is a key component. Within three years, approved applicants must increase the domestic value addition (DVA) of their EVs made in India by at least 25%, and within five years, it must reach 50%. MHI-designated agencies will audit compliance. Applicants must provide a bank guarantee equal to the entire amount of the duty waived in order to enforce commitments.
The government is putting its money on these circumstances to create jobs locally, promote technology transfer, and support the growth of a deep EV supply chain. Expenses for new plants, machinery, R&D, and core infrastructure like charging networks (up to 5% of investment) are eligible, but land investments will not count towards the committed investment. Building investments will be taken into account, but their share of the overall investment will not exceed 10%.
The requirements for applicants to be eligible are strict. Only businesses or business groups that have at least ₹3,000 crore in global fixed assets and ₹10,000 crore in global revenue are eligible to apply. Following each official notification, there will be a rolling 120-day window for applications to be submitted until March 15, 2026.
One noteworthy development is that Tesla, the most well-known EV manufacturer in the world, has not indicated interest in participating in the programme. Tesla has started establishing showrooms in major Indian cities and plans to import automobiles under the country’s current duty structures, according to Kumaraswamy.
The plan has been generally well received by industry participants. The lower duty rate “sends a clear signal to global EV manufacturers that India is ready for innovation and willing to strengthen supply chains,” according to Rohan Dewan, CEO of electric mobility startup LeafyBus. According to him, the policy is creating opportunities in fields like the integration of renewable energy sources and battery manufacturing.
Dhiraj Agrawal, the chief business officer of Mufin Green Finance, praised the localisation objectives as “ambitious but necessary” in order to establish a strong domestic ecosystem. “It is especially important to meet the target of 25% DVA in three years and 50% within five years,” Agrawal said. “It pushes for long-term investment while setting clear expectations for local sourcing.”
He cautioned that the government’s ability to ensure effective implementation and additional support in the areas of funding, infrastructure, and workforce development is essential to success.
Although it is still in its infancy, India’s EV market offers enormous growth potential. By 2030, the government wants EVs to account for 30% of all car sales. India is indicating with the new plan that it is prepared to bid on its terms for the upcoming wave of international automotive investment.
