Why is it in the news?

• The Ministry of Heavy Industries (MHI) is spearheading the initiative to promote the manufacturing the electric passenger cars.

More about the news

• The Project Management Agency (PMA) will play a pivotal role in providing secretarial, managerial, and implementation support, as well as carrying out additional responsibilities assigned by the Government of India (GoI).

Eligibility Criteria:

• Investment Requirements: Companies interested in availing the benefits of the scheme must commit a minimum investment of Rs 4150 Crore (USD 500 million) within a three-year window. There is no cap on the maximum investment.
• Domestic Value Addition (DVA): Manufacturers must adhere to DVA criteria, requiring a 25% value addition within three years and 50% within five years from the date of issuance of approval by MHI/PMA.
• Bank Guarantee: A bank guarantee will only be returned when the 50% DVA mark is attained, along with the investment of at least Rs 4,150 crore, or to the extent of duty foregone in five years, whichever is higher.
• Performance Criteria: All electric passenger vehicles manufactured under this scheme must meet the performance criteria outlined in the Production Linked Incentive (PLI) Auto scheme.
• Tenure: The scheme will operate for a tenure of five years, subject to any alterations notified by the Government of India.

Rationale of the Scheme

• Attract Investments: By offering incentives and creating a conducive environment, the scheme aims to attract investments from global Electric Vehicle (EV) manufacturers into the Indian market.
• Position India as a Manufacturing Hub: The scheme seeks to position India as a preferred manufacturing destination for EVs, thereby bolstering the country’s reputation in the global automotive industry.
• Stimulate Competition: By encouraging multiple EV players to establish manufacturing facilities in India, the scheme aims to foster healthy competition.
• Reduce Oil Dependency: The promotion of EV manufacturing aligns with India’s goals of reducing its dependency on crude oil imports, thereby enhancing energy security and reducing the carbon footprint.
• Generate Employment: The establishment of manufacturing facilities and ancillary industries is anticipated to generate significant employment opportunities across various sectors of the economy.