By The government of India is going to unveil new guidelines for foreign investments under its recently approved electric vehicle (EV) policy. According to a media report, these guidelines are set to impose stricter scrutiny on proposals from EV manufacturers based in countries that share a land border with India, notably China. This move reflects a strategic approach to both increasing domestic manufacturing and safeguarding national interests. A government official, speaking on the condition of anonymity, highlighted that applications from auto companies in neighbouring countries would be subjected to “much more onerous scrutiny.” However, existing companies operating within India will not need to establish new subsidiaries to comply with the new policy.
The fresh guidelines, expected to be detailed soon, will outline the application process, including portal links and the designated project monitoring agency. Under these guidelines, foreign EV manufacturers can apply for an import license to bring a specified number of EVs into India. To qualify for these licenses, companies must commit to significant investments as prescribed by the policy. The government approved the new EV policy on March 15, 2024, stipulating that foreign companies must invest a minimum of Rs 4,150 crore (approximately $560 million) within three years.
This investment is required to establish local manufacturing facilities with at least 25% localization of components. This ambitious policy aims to foster a robust domestic EV manufacturing ecosystem and reduce reliance on imports. Moreover, the policy offers a significant incentive for companies meeting these criteria. They will be permitted to import up to 8,000 EVs per year at a reduced import duty of 15% for cars priced at $35,000 and above. This is a substantial reduction from the current import duties, which range from 70% to 100%. This strategic shift underscores India’s commitment to becoming a global hub for EV manufacturing while balancing the need for economic security and technological advancement. The detailed guidelines are anticipated to provide clarity and direction for foreign EV makers looking to invest in India’s burgeoning EV market.
