The Ministry of Heavy Industries has issued extensive guidelines for the plan to promote the manufacture of electric passenger cars in India (SPPCI), which provides a clear outline to global vehicle manufacturers to benefit from low import duties in exchange for establishing local construction operations.
Originally announced in March 2024, the scheme is particularly focused on electric passenger vehicles, marking a strategic change for eV-centric policies targeted by comprehensive motor vehicle incentives. To qualify, companies must commit to minimal investment of 4,150 crores (about 500 million USD), within three years of approval. This investment should be directed towards manufacturing and operation of construction facilities for electric passenger cars in India.
The policy aims to attract global motor vehicle players installed instead of startups, in which the eligibility criteria emphasize strong financial capacity and the current appearance in the global motor vehicle sector.
Import duty relief structure
A major feature of the scheme is low customs duty on imported electric vehicles. Approved manufacturers will be allowed to import a fully manufactured EVS at a concessional fee rate of 15%at a price of 35,000 or more, which is much lower than the prevailing rates.
Duty relief is subject to the following conditions:
A maximum of 8,000 vehicles can be imported annually under a low rate. The profit is available for a period of five years, the total fee savings are ₹ 6,484 crore or the actual investment amount-which is less unused annual quota, can be carried forward for later years.
Localization requirements
Companies participating in the scheme require to increase the local price joints in their manufacturing operations progressively:
Get 25% domestic value within three years in addition to 50% domestic value within five years
The purpose of these goals is to ensure that import duty benefits translate into real technology transfer and local supply chain development, rather than serve as permanent subsidies for imported vehicles.
To ensure that companies follow through their commitments, this scheme requires bank guarantee that total fee savings or Rs. 4,150 crores, whichever is more. The guarantee should be valid during the entire scheme period and if companies fail to meet the investment or localization goals, they will be confiscated.
Qualified investment component
Guidelines underline the types that can be counted towards the necessary investment commitment:
Manufacturing equipment and machinery research and development facilities charge infrastructure, capted at 5% of total investment land and buildings, limited to 10% of investment, provided that they are part of core manufacturing facility
The Ministry has planned to launch an online portal for submission and will use existing processes from the PLI automotive scheme to evaluate domestic price joint claims.
Following the protocol installed from other motor vehicle incentive programs, the certification of local content will be controlled by the government approved test agencies.
Market reference
The policy manufactures India’s current automotive incentive framework, but especially focuses on electric passenger cars. Unlike the comprehensive PLI scheme for motor vehicle components, SPMPCI abolished vehicle manufacturing by companies with sufficient global operations.
India’s electric passenger car market is smaller than two-wheelers and three-wheelers, which have adopted rapidly due to low cost and simple charging requirements. The new scheme is designed to accelerate four-wheel adoption by reducing the cost barrier for global manufacturers to test the Indian market by creating local capacity.
Implementation timeline
This plan sets a clear time limit for participants:
Within 3 years: Manufacturing operations should start within 3 years: Get 25% domestic price joint within 5 years: 50% domestic price addition
Policy implication
The scheme highlights the Indian government’s strategy to offer temporary import duty concessions to run long -term manufacturing investment. Instead of cutting permanent tariffs, the policy offers clear performance incentives associated with milestones.
For global vehicle manufacturers, it presents an opportunity to estimate consumer interest in premium electric vehicles while laying groundwork for future local production. The high investment limit indicates the government’s intentions to attract severe, long -term players rather than short -term entry.
By focusing exclusively on electric passenger cars, the initiative supports India’s climate goals. However, its real impact will depend on how many global manufacturers consider the market capacity to be required.
Once the official online portal is launched, the application is expected to open soon.
