To promote investment in the electric vehicle (EV) sector and strengthen the Make in India initiative, the government of India has approved a new scheme. The goal of the scheme is to make India a manufacturing destination for EVs.
The new scheme will provide incentives to promote the production of EVs in the country. The government has approved an investment of Rs 4150 crore (USD 500 million) for the purpose. There is no limit on the maximum investment amount.
The policy proposes to set up manufacturing facilities in India within three years. The commercial production of EVs will start after the setting up of the manufacturing plant. To reach 50 per cent domestic value addition (DVA), the manufacturing unit will have to be set up and start commercial production of EVs within five years.
In the third year, the customs duty on EV imports will be reduced by 15 per cent. The total number of EV imports allowed per year will be determined based on the total duty foregone or investment made, whichever is lower. The government has also proposed to provide carryover of unused annual import limits.
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In order to promote the Make in India initiative, the new scheme proposes that the investment commitment made by the company will have to be backed up by a bank guarantee in lieu of the custom duty forgone. The bank guarantee will be invoked in case of non-achievement of DVA and minimum investment criteria. The government has also proposed to set up a manufacturing subsidy program for EV manufacturers. This program will enable the companies to obtain financial assistance from the government for the purchase of capital.
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