EV policy paves way for Tesla entry
- March 16, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
EV policy paves way for Tesla entry
Subject: Economy
Section: Infra
The Union government of India has announced a new Electric Vehicles (EV) policy that includes a significant reduction in import duties for certain electric vehicles.
This move is aimed at encouraging global EV manufacturers, such as Tesla, to invest in setting up manufacturing facilities in India.
Key Points of the New EV Policy:
Reduction in Import Duties:
- Under the new policy, completely built-up (CBU) electric cars can be imported at a reduced import duty of 15%.
- This is a substantial decrease from the previous import duty rates of 60% or 100% for completely built-up cars.
- Tesla, among other global EV manufacturers, had requested import duty reductions ranging from 15% to 40% on fully assembled cars, based on their price.
Criteria for Reduced Import Duty:
- The new policy allows EV passenger cars (e-4W) to be imported with a minimum Cost, Insurance, and Freight (CIF) value of $35,000.
- This reduced duty rate of 15% will apply for 5 years from the date of issuance of approval by the Ministry of Heavy Industries.
- There is a cap of 8,000 on the number of EVs that can be imported at the reduced rate, with the option to carry over unutilized annual import limits.
Minimum Investment Requirement:
- In order to avail the duty concessions, manufacturers are required to invest a minimum of ₹4,150 crore in setting up manufacturing facilities in India.
- The manufacturing facilities must become operational within 3 years from the date of issuance of approval by the Ministry.
- Manufacturers must achieve a minimum Domestic Value Addition (DVA) of 25% within the initial 3-year period, and 50% DVA within 5 years.
Promoting EV Manufacturing in India:
- The government emphasized that the scheme aims to promote the manufacturing of electric vehicles in India.
- The EV sector is expected to grow significantly within the Indian automotive industry in the coming years.
- India is currently the world’s third-largest automobile market and one of the fastest-growing automotive markets.
Opportunity for Global Transition to EVs:
- India sees itself as having the opportunity to lead the global transition from conventional internal combustion engine vehicles to more efficient and decarbonized EV technology.
- The automotive sector in India contributes over 7.1% to the country’s GDP and is expected to grow substantially, with a projected market size of ₹24.9 lakh crore by 2030.
The new EV policy is part of India’s efforts to promote sustainable and environmentally friendly transportation solutions while also boosting the domestic manufacturing sector and creating employment opportunities.
Key government initiatives in India aimed at promoting the adoption of Electric Vehicles (EVs):
- Faster Adoption and Manufacturing of Electric Vehicles (FAME) Scheme II:
- Provides incentives for EV manufacturers and buyers.
- Incentives include subsidies, tax rebates, preferential financing, and exemptions from road tax and registration fees.
- National Electric Mobility Mission Plan (NEMMP):
- Sets targets to achieve 6-7 million sales of hybrid and electric vehicles annually from 2020 onwards.
- Provides fiscal incentives to encourage adoption.
- National Mission on Transformative Mobility and Battery Storage:
- Aims to create a comprehensive ecosystem for EV adoption.
- Supports the establishment of large-scale battery manufacturing plants in India.
- Production Linked Incentive (PLI) Scheme:
- Offers incentives for the manufacturing of electric vehicles and related components.
- Designed to boost domestic production and make EVs more affordable.
- Vehicle Scrappage Policy:
- Provides incentives for the scrapping of old vehicles.
- Encourages the purchase of new electric vehicles as replacements.
- Go Electric Campaign:
- Aims to raise awareness about the benefits of EVs among the public.
- Focuses on promoting EV adoption and the development of EV charging infrastructure.
- Support for Global EV30@30 Campaign:
- India is among the countries supporting the global EV30@30 campaign.
- The goal is to achieve at least 30% new vehicle sales being electric by 2030.
- Charging Infrastructure Development:
- The Ministry of Power has issued revised guidelines on charging infrastructure.
- Mandates the presence of at least one charging station within a 3 km grid and every 25 km along highways.
- EV Charging Facilities in Buildings:
- The Ministry of Housing and Urban Affairs has amended the Model Building Bye-laws, 2016.
- Requires 20% of parking spaces in residential and commercial buildings to be allocated for EV charging facilities.