On Friday, the Union Government authorized a strategy to boost electric vehicle (EV) manufacturing in India and attract investments in the EV market from leading global manufacturers.
According to the information released, EV manufacturers are expected to invest a minimum of Rs 4,145 crore ($500 million), with no maximum investment limit. Instead of the waived customs charge, the investment promise must be accompanied by a bank guarantee.
"This will strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduced imports of crude oil, lower trade deficit, reduced air pollution, particularly in cities, and will have a positive impact on health and environment," the press release stated. It will also give Indian consumers access to the newest technology and support the Made in India initiative.
Automakers must establish manufacturing plants within three years, with 25% of components supplied locally. If the manufacturers cannot achieve 50% domestic value addition (DVA) within five years, the bank guarantee will be activated. DVA is the percentage of locally sourced materials utilized in product manufacturing.
Along with the advantages for electric vehicle manufacturers who decide to locate their manufacturing facilities in India, the center will cut customs fees on a limited number of cars, up to 8,000 each year.
15 percent customs tax will be levied on automobiles with a minimum CIF value of $35,000 or more for a total of five years, providing the manufacturer meets the three-year deadline.
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