The Ministry of Heavy Industries announced detailed guidelines for its electric car manufacturing policy, the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). The Government of India had earlier approved the policy and was first announced on March 15, 2024.
What is the SPMEPCI policy?
According to the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), an automobile manufacturer is required to invest at least Rs 4,150 crore (around $500 million) in order to set up a manufacturing plant in India. Under this scheme, the company can directly import completely built electric (CBUs) electric four-wheelers priced at least $35,000 to avail a reduced customs duty of 15% for five years. A company can import 8,000 units per year at the lower tariff rates.
Kumaraswamy said “As a safeguard, companies must furnish a bank guarantee equal to the greater of Rs 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 localisation targets.”
Furthermore, the companies must achieve at least 25% of local components within 3 years and 50% within 5 years, based on the standards set under the PLI Auto Scheme. The total benefit under the scheme is capped by either the committed investment or a maximum duty foregone limit of Rs 6,484 crore, whichever is lower.
What are the new guidelines?
Union Minister of Heavy Industries HD Kumaraswamy explained that the scheme’s aim is to receive investments from global players, which will only be used in manufacturing facilities, research and development equipment and certain building expenses (within set limits). Land costs are excluded, and spending on charging infrastructure is capped at 5% of the total committed investment. The government believes the scheme will help India become a manufacturing hub.
The minister further explained that the long-awaited application process will open soon anda formal Notice Inviting Applications will be open for a 120-day window for companies to apply online.
Eligibility criteria require applicants to demonstrate minimum global automotive revenues of Rs 10,000 crore and global fixed assets of at least Rs 3,000 crore, ensuring only established players can qualify.
Speaking to journalists, Kumaraswamy said, “Under the Prime Minister‘s visionary leadership, India is taking bold strides toward net-zero by 2070 while ensuring that economic development, technological progress and employment generation go hand in hand.”
