India plans to broaden its electric vehicle incentives to include automakers producing EVs at existing factories, moving beyond its initial focus on new facilities. The revised policy aims to attract investment from established manufacturers like Toyota and Hyundai, according to ministry meeting minutes seen by Reuters.
Policy framework evolves
The country's EV policy, announced in March, offers substantial import tax reductions for automakers investing US$500 million in local EV production with 50% domestic component sourcing. The updated framework will extend these benefits to EV investments at existing factories that produce gasoline or hybrid vehicles, provided they maintain separate production lines meeting local sourcing requirements.
Investment criteria and flexibility
For new facilities, investments in machinery and tools for EV production will count fully toward the US$500 million threshold, even when equipment serves multiple vehicle types. To ensure equitable treatment, the government will establish minimum EV revenue targets for qualifying plants or production lines. The policy is expected to be finalized by March.
Major automakers show interest
According to meeting minutes cited by Reuters, several global manufacturers have expressed interest in the policy. Toyota inquired about investing in separate assembly lines within multi-powertrain plants and including charging station installations in the investment calculation. Hyundai sought clarification on R&D expense eligibility, which was denied. Volkswagen requested flexibility in investment timing, proposing to invest 75% of the required amount within the first three years of the five-year scheme, while also asking about supplier investment qualification.
Strategic importance for India
On March 15, the government approved the Scheme to Promote the Manufacturing of Electric Passenger Cars in India (SPMEPCI) as part of Prime Minister Narendra Modi's vision for a greener, self-reliant India. The initiative aims to reduce fossil fuel dependency, improve air quality, and generate employment in the automotive sector.
Market outlook
As the world's third-largest automobile market, India anticipates its automotive sector to double in value to US$300 billion by 2030. According to NITI Aayog, a government think tank, EV penetration rates by 2030 are projected to reach 35-40% for two-wheelers, 9-11% for private four-wheelers, 20-25% for shared four-wheelers, and 13-16% for buses.
