Will Your Next EV Car Be Made in India? Strategic EV Scheme Suggests So

In a significant move aimed at electrifying India’s automotive future and wooing global giants, the Government of India has officially notified the much-awaited “Scheme to Promote Manufacturing of Electric Passenger Cars in India” (SPMEPCI). The scheme marks a strategic step toward positioning India as a serious contender in the global electric vehicle (EV) race and signals a clear message to investors — India is ready for large-scale, high-tech EV manufacturing.

The announcement, which comes as part of Prime Minister Narendra Modi’s larger vision for sustainable growth, aims to align industrial development with India’s commitment to achieve net-zero emissions by 2070. This also gives a major push to green mobility, while simultaneously attempting to reduce dependency on fossil fuels and stimulate high-value domestic manufacturing.

The Ministry of Heavy Industries (MHI) issued the notification on March 15, 2024. On the same day, the Department of Revenue, Ministry of Finance, released a notification announcing significant customs duty concessions for approved players. The stage is now set for interested global automotive companies to apply for participation, with the government soon to roll out the application portal.

A Clear Invitation to Big Players

At the heart of this scheme is the government’s intent to attract serious investment. To qualify, companies will need to commit to investing at least ₹4,150 crore (approximately USD 500 million) within three years. In exchange, they will be allowed to import up to 8,000 completely built electric four-wheelers per year at a significantly reduced customs duty rate of 15% — a marked shift from the steep 70-100% duties that currently apply.

To prevent misuse and ensure only genuine players enter the fray, there’s a cap on the total duty foregone — either ₹6,484 crore or the actual investment made, whichever is lower. If a company does not utilize its full quota in a year, the scheme allows carryover of the unutilized units to the next year, giving some operational flexibility to manufacturers.

'Make in India' Still at the Core

While the scheme makes room for initial imports to help brands enter the Indian market quickly, it comes with firm guardrails to ensure that long-term gains are rooted in India. Companies will have to start making cars in India within three years of getting approval under the scheme. The expectations are clear — begin with at least 25% domestic value addition (DVA) within three years, and scale that to a minimum of 50% within five years.

This requirement isn’t just symbolic. It will be rigorously certified by government-approved testing agencies under the same Standard Operating Procedures (SOPs) as the existing Production Linked Incentive (PLI) Auto Scheme. This ensures that companies just don’t assemble kits locally, but truly build in India.

What Counts as Investment?

The scheme provides clarity on what constitutes eligible investment. Spending on new plant, machinery, research and development (R&D), and utilities is counted. While land cost is excluded, investment in buildings and EV charging infrastructure is considered — though capped at 10% and 5% of the committed investment, respectively.

Brownfield projects — or existing setups being expanded for EV production — are also allowed, but they must transparently segregate the investments meant for this scheme from their ongoing facilities.

Window of Opportunity — But With Conditions

The application window will remain open for a minimum of 120 days, and possibly reopen periodically until March 15, 2026. Interested players will need to pay a non-refundable application fee of ₹5 lakh. The portal for submitting applications will soon be live on the official MHI website.

The eligibility bar is high, clearly targeting global players with scale. Companies must demonstrate a global automotive group revenue of at least ₹10,000 crore and have at least ₹3,000 crore in global fixed asset investment. The scheme defines “group companies” as those holding a minimum of 26% voting rights in one another, thereby allowing global partnerships and alliances to apply jointly.

Safeguards to Ensure Compliance

In a strong move to safeguard the exchequer and ensure only serious players apply, companies will have to submit a bank guarantee equal to the higher of ₹4,150 crore or the total duty that would be forgone through concessional imports. This guarantee must remain valid for the entire duration of the scheme, ensuring a high level of financial and operational commitment from participants.

Policy Backed by Political Push

Union Minister for Heavy Industries H.D. Kumaraswamy underlined the transformative potential of the scheme, calling it a “forward-looking policy” that aligns with India’s long-term sustainability goals. “It will make India a global hub for electric vehicle manufacturing,” he said, stressing the focus on innovation, job creation, and green mobility.

Meanwhile, Union Commerce and Industry Minister Piyush Goyal, on a recent visit to Europe, met with Renault CEO Luca de Meo, signaling India's openness to high-level collaboration. The timing of the scheme — right in the middle of growing global interest in EVs — seems calibrated to create a strategic pull for automakers looking to diversify manufacturing beyond China.

This scheme comes at a pivotal moment. Global EV demand is soaring. Countries are tightening emission norms. Automakers are realigning supply chains in the post-COVID, geopolitically tense world. India, with its massive domestic market, skilled workforce, and cost-competitive manufacturing, is well-positioned — but it needed a clear, confident policy framework to seal the deal. That’s what the SPMEPCI aims to deliver.

For India’s startup ecosystem, particularly those working in EV components, charging infrastructure, battery innovation, and green technologies, the scheme could bring massive ripple effects. As large OEMs set up shop or expand existing operations, the demand for local suppliers, software solutions, and smart mobility tools is expected to spike — opening doors for Tier 2 and Tier 3 startups to plug into the EV value chain.

The government has not just laid down guidelines — it has thrown open a gateway. With incentives that balance short-term import facilitation and long-term local value creation, India is sending a powerful message to the global EV industry: Come, invest, build, and grow here — but on our terms.

Whether this scheme triggers a new era of EV-driven industrial transformation depends on how swiftly companies respond, how efficiently the policies are implemented, and how actively Indian startups and MSMEs position themselves in this evolving landscape.

But one thing is certain — India is no longer watching the EV revolution from the sidelines. With this bold policy step, it is entering the arena with a clear roadmap and an ambitious vision.