The Ministry of Heavy Industries (MHI) has announced detailed guidelines for the “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI), effective from June 2, 2025. Originally notified on March 15, 2024, this initiative aims to position India as a global hub for electric vehicle (EV) manufacturing, attract investments, create employment opportunities, and support the “Make in India” campaign. The scheme aligns with India’s broader goals of achieving net-zero emissions by 2070 and promoting sustainable mobility.
Under the SPMEPCI, automobile manufacturers are required to invest a minimum of ₹4,150 crore (approximately $500 million) to establish manufacturing facilities in India. In return, approved companies can import up to 8,000 completely built electric four-wheelers annually at a reduced customs duty of 15% for five years, provided each vehicle has a minimum CIF value of $35,000. This concession aims to encourage global EV manufacturers to set up production units in the country.
To ensure substantial local value addition, the scheme mandates that participating companies achieve at least 25% domestic value addition (DVA) within three years and 50% within five years. These targets will be assessed following the standard operating procedures of the Production-Linked Incentive (PLI) scheme for the automobile sector.
As a safeguard, companies must furnish a bank guarantee equal to the greater of ₹4,150 crore or the total customs duty they are exempted from over the scheme period. This guarantee must remain valid throughout the tenure of the scheme and will serve as a financial assurance of compliance with investment and localization targets.
The scheme has garnered interest from global automobile manufacturers. Companies like Mercedes-Benz and Volkswagen are reportedly considering setting up manufacturing operations in India under this initiative. However, Tesla has expressed interest only in establishing sales outlets in the country and not in local manufacturing, thus not qualifying for the benefits under the new scheme.
The introduction of the SPMEPCI is a strategic move by the Indian government to accelerate the adoption of electric vehicles, reduce dependence on imports, and promote sustainable transportation solutions. By providing clear guidelines and incentives, the scheme aims to create a conducive environment for both domestic and international players to invest in India’s burgeoning EV sector.
Discussion about this post