Automakers can now apply for India’s new electric car manufacturing scheme

By Staff Report June 24, 2025 11:58 am IST

The government has opened applications for a new scheme offering reduced import duties on electric cars in exchange for local manufacturing and investment commitments.

The Indian government has opened an online portal to invite applications for its new electric car manufacturing project, the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMPCI). Open until October 21, 2025, the plan allows global automakers to import electric cars (EVs) at much lower customs taxes in exchange for considerable investment and manufacturing commitments in India.

Under the initiative, Original Equipment Manufacturers (OEMs) can import Completely Built-Up (CBU) electric automobiles with a minimum Cost, Insurance and Freight (CIF) value of $35,000 at a 15% customs charge for five years—a reduction from the typical duty rate of 70-110%.

Manufacturers must invest at least ₹4,150 crore in local production to receive the benefits, which are limited to 8,000 imported units per year.

To qualify for tariff discounts, participating enterprises must develop manufacturing facilities in India and begin commercial production within three years of approval. Furthermore, they must produce 25% domestic value addition (DVA) within the first three years, rising to 50% by the fifth year.

A key requirement of the policy is that companies must provide a bank guarantee, which is a promise from a bank in India to cover the customs duty that is not collected. This guarantee will be used if the company does not fulfil its investment or DVA commitments.

The finalised guidelines incorporate significant changes from prior versions. Most notably, the scheme now allows brownfield investments as long as they are physically separate from current facilities. It also broadens the investment scope to encompass research and development (R&D) and electric vehicle charging infrastructure. While R&D spending is not limited within the entire committed investment, charging infrastructure can only get up to 5% of the investment.

With this scheme, the government hopes to entice major EV manufacturers to establish operations in India, support local manufacturing, and advance the country’s transition to sustainable mobility.