Government likely to release guidelines on new EV policy in next 3-4 weeks

The government is likely to come out with guidelines on the new electric vehicle (EV) policy in the coming days after which it can become fully functional in the next few months.

Sources in the know have told businessline that some of the manufacturers have requested the government to include brownfields also in the definition of investment and not only greenfields (new plant) so that they can benefit under the scheme.

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The government, on March 15, had approved e-vehicle policy to promote India as a manufacturing destination for EVs. According to the policy, companies that set up manufacturing facilities for e-vehicles will be allowed limited imports of cars at lower customs duty. Such companies will have to set up manufacturing facilities in India in three years and attain a localisation level of 50 per cent by the fifth year.

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“The guidelines are expected in the next three-four weeks...some of the OEMs (original equipment manufacturers) were asking if brownfields can be counted in the policy to get the benefits, as a part in the investment definition, so it will be discussed further while making the guidelines,” an official privy to the matter said without naming any company.

However, the official also mentioned that theoretically it would not be possible to give benefits on the basis of brownfields and OEMs need to set up a separate factory to get the domestic valuation addition (DVA) of 25 per cent in the first three years.

Investment criteria

According to the policy notification, there is a minimum investment requirement of ₹4,150 crore ($500 million) and for a company to set up manufacturing facilities in India, and start commercial production of EVs. There is no limit on maximum investment.

To achieve the DVA level of 25 per cent by the third year and 50 per cent by the fifth year, the government has also approved the customs duty of 15 per cent (as applicable to completely knocked down or CKD units), applicable for five years in the policy.

According to sector experts, only those companies who have completely knocked down units (CBUs) would benefit under this policy. Companies such as Mercedes-Benz, BMW Group, Audi, Hyundai Motor, Jaguar Land Rover and Volkswagen Group would benefit under the scheme. It would also benefit new entrants like VinFast which is setting up a facility in Tamil Nadu and Tesla which is still scouting for lands in the country.

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