Context: The Ministry of Heavy Industries (MHI) has notified the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).
Relevance of the Topic: Prelims: Key facts related to SPMEPCI & associated guidelines.
Scheme to Promote Manufacturing of Electric Passenger Cars in India
The scheme aims to:
- Boost domestic EV manufacturing by significantly reducing import duties for foreign manufacturers that commit to investing in local production.
- Attract global investments in electric vehicles (EV) and position India as a global automotive manufacturing hub.
Key Features of SPMEPCI:
- Approved companies will be allowed to import up to 8,000 Completely Built Units (CBUs) of electric four-wheelers (e-4W) annually at a reduced customs duty of 15% (subject to a minimum CIF value of USD 35,000 per unit) for a period of five years.
- To qualify for these benefits:
- Applicants must commit to a minimum investment of Rs 4,150 crore within 3 years of receiving approval. They must establish manufacturing facilities and commence production within this period.
- They must achieve minimum domestic value addition (DVA) of 25% within 3 years, and minimum DVA of 50% within 5 years from the date of issuance of approval letter.
- They should have global revenues of ₹10,000 crore at the time of application to qualify and receive benefits.
- Total duty foregone will be limited to either Rs 6,484 crore or the actual investment made by the applicant, whichever is lower.
Foreign companies can invest in existing EV manufacturing setups in India (brownfield investments), instead of only setting up entirely new factories earlier (greenfield investments).
Significance of SPMEPCI guidelines:
- Boosts Domestic Manufacturing: Attracts global EV companies to set up factories in India, strengthening the Make in India and Atma Nirbhar Bharat initiatives.
- Encourages EV Adoption: Makes electric vehicles more affordable to Indian consumers through reduced import duties.
- Promotes Investment & Technology Transfer: Ensures large-scale investments, local job creation, and introduction of advanced EV technologies.
The scheme aligns with India’s climate goals, including its commitment to achieve net-zero emissions by 2070. It will also foster environmental sustainability through strategic policy interventions in the EV ecosystem.