Govt Invites Applications Under New EV Scheme With 15% Import Duty, Rs 4,150 Cr Investment Mandate

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The Scheme to Manufacture Electric Passenger Cars in India () allows global car manufacturers to import Completely Built-Up Units (CBUs) of electric cars with a minimum cost, insurance, and freight (CIF) value of $35,000, at a reduced customs duty of 15% for five years. This is a significant reduction from the normal duty, which ranges from 70% to 110%. Under this scheme, a maximum of 8,000 cars can be imported each year.

The policy requires companies to establish manufacturing facilities in India with a minimum investment of Rs 4,150 crore and to begin commercial production within three years to benefit from the lower import duty. Additionally, the scheme includes a Domestic Value Addition clause, mandating a 25% domestic value addition within three years, which will increase to 50% by the fifth year.

Companies must also provide a bank guarantee equivalent to the customs duty waived, ensuring compliance with investment and domestic value addition criteria. This guarantee will be unconditional and irrevocable, allowing invocation if the company fails to meet the specified requirements.

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Recent guidelines have introduced significant changes, including allowing brownfield projects for investment, provided there is a clear physical separation from existing manufacturing facilities. This change facilitates the investment needed for research and development (R&D) and electric vehicle charging infrastructure.