India plans to extend electric vehicle incentives to automakers that build models at existing plants in the country, rather than restrict benefits to those willing to build new plants, a person with direct knowledge of the matter said.
India’s electric vehicle policy, which is still being finalized, was originally intended to encourage Tesla to enter the market and produce locally, but the U.S. automaker abandoned those plans earlier this year.
Minutes of a meeting with India’s heavy industries ministry seen by Reuters showed that other foreign automakers have also shown interest in producing electric vehicles at existing and new plants in India. Sources said it was hoped the policy change would encourage companies such as Toyota and Hyundai to invest in electric vehicles.
Under the policy announced in March, a carmaker that invests at least $500 million (roughly Rs. 42,293 crore) to produce electric vehicles in India, with 50% of its components sourced locally, is entitled to a significant cut in import taxes – from as high as 100% to 15% for the production of 8,000 electric vehicles per year.
The government will now also consider electric vehicle investments in existing factories that currently produce gasoline engines and hybrid vehicles, the source said on condition of anonymity.
However, sources said the electric models must be manufactured on separate production lines and comply with local procurement standards.
He said that in the case of new plants, investment in machinery and tools for manufacturing electric vehicles will be fully factored into the $500 million (roughly Rs. 42,293 crore) requirement, even if the equipment is also used to make other types of cars.
To ensure carmakers are treated fairly, the government will set a minimum EV revenue target for a factory or production line that must be met to qualify for the program, he said.
The policy will be finalized in March, he added.
Toyota officials asked whether electric vehicle policy would allow investment in a separate assembly line at a plant that produces multiple powertrains, according to minutes of the meeting. It is also seeking to know whether manufacturing and installation of charging stations counts as part of the $500 million (approximately Rs. 42,293 crore) investment requirement.
Toyota and the Heavy Industry Ministry did not respond to Reuters’ requests for comment.
Minutes of the meeting show Hyundai asked whether money for research and development could be counted as part of the $500 million investment requirement. Sources said this would not be counted.
A Hyundai Motor India spokesperson said it is awaiting the rollout of final policies and guidelines.
Volkswagen India wants more wiggle room on investment horizon. It asked if 75% of the $500 million (about Rs 42,293 crore) could be invested in the first three years of the five-year plan instead of the 100% currently required. It also sought to understand whether suppliers’ investments were eligible, minutes of the meeting show.
Volkswagen said it is studying the latest electric vehicle policy in “details” and will assess future directions accordingly.
© Thomson Reuters 2024
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