India plans to expand electric vehicle incentives to automakers making models at existing factories in the country, rather than limiting benefits to automakers looking to build new plants, a person with direct knowledge of the matter said.
India’s EV policy, which is currently being finalized, was basically designed to encourage Tesla But the U.S. automaker backed away from those plans earlier this year.
Other foreign automakers have shown interest in making EV in India at existing and new factories, according to minutes of a meeting with India’s heavy industries ministry seen by Reuters. The policy change is expected to boost EV investments from companies like Toyota and Hyundai, the source said.
Under the policy announced in March, an automaker that invests at least $500 million (roughly Rs. 42,293 crore) in India to manufacture an EV with 50 percent components produced locally is entitled to a huge reduction on import taxes – 15 percent decline. As high as 100 percent for 8,000 electric cars per year.
The government will also now consider EV investments in existing factories that currently build gasoline-engine and hybrid cars, said the source who was not authorized to speak to media and declined to be identified.
However, the electric model must be built on a separate production line and meet local sourcing norms, the source said.
In the case of a new factory, the investment in machinery and equipment to make EVs will be fully counted towards the $500 million (roughly Rs. 42,293 crore) requirement, he said, even if the equipment is also used to manufacture other types of cars. Is done.
To ensure that automakers are treated fairly, the government will set a minimum EV revenue target for a plant or production line that must be met to qualify for the scheme, he said.
He said the policy would be finalized by March.
According to minutes of the meeting, Toyota executives asked whether the EV policy would allow investing in a separate assembly line within a plant that produces multiple powertrains. It also tried to understand whether construction and installation of charging stations would be counted as part of the $500 million (roughly Rs. 42,293 crore) investment requirement.
Toyota and the Heavy Industries Ministry did not respond to Reuters requests for comment.
Hyundai asked whether money spent on research and development could be counted as part of the $500 million investment requirement, the minutes showed. The source said it will not be counted.
A spokesperson said Hyundai Motor India is waiting for the final policy and guidelines to be implemented.
Volkswagen’s Indian unit wanted more flexibility in the investment timeline. It asked whether 75% of the $500 million (about Rs 42,293 crore) could be invested in the first three years of the five-year plan, rather than the 100 percent currently required. It also sought to understand whether the investments made by suppliers would be worthwhile, as shown in the minutes.
Volkswagen said it is studying the latest EV policy “in detail” and will evaluate it accordingly moving forward.
© Thomson Reuters 2024
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