Amid Tesla India Entry Plans, Govt Says Working On Revised EV Policy

As Tesla sets its sights on entering the Indian market in the long term, the government is understood to be currently revisiting the EV Policy it had introduced for global carmakers, revealed sources. This move aims to lower entry barriers for global automakers while boosting local EV production capabilities.

According to a source from the heavy industry ministry, the Scheme for Manufacturing Electric Cars (SMEC), which was launched in March 2024, will have some revisions. According to him, the revised EV Policy will address existing gaps, introduce more targeted incentives, and encourage greater participation from global and domestic automakers. 

“We held three rounds of consultations with the potential applicants under this scheme and we have received several suggestions. Very shortly, we will be doing an inter-ministerial consultation. Thereafter, the guidelines of the scheme shall be released after that. The companies will then be able to apply for this policy,“ revealed a source requesting anonymity. 

Under SMEC, automakers can import premium EVs at concessional duties initially, provided they invest $500 million within three years in setting up local assembly lines. The scheme aims to attract global electric car manufacturers, such as Tesla and VinFast, to set up production facilities in India by offering a temporary duty concession of 15 percent.

Carmakers setting up dedicated electric vehicle (EV) assembly lines in existing factory premises will qualify for incentives under SMEC, revealed the source. Additionally, the government is looking at considering research and development (R&D) investments made by carmakers under this scheme will also be taken into consideration. 

“Investments under SMEC scheme will be similar to the PLI Auto one. Hence companies making investments towards R&D will also be considered,” revealed the same source quoted above. 

The revised policy benefits companies like Škoda-Volkswagen Auto, Hyundai, Toyota, and Mercedes-Benz, enabling them to use existing infrastructure instead of building new facilities