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Govt to Promote Manufacturing of Electric Passenger Cars

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.
Other Initiatives to Promote EVs

·       Faster Adoption and Manufacturing of EVs (FAME) India: Launched in two phases, in 2015 and 2019 respectively, FAME India offers incentives for the adoption of electric vehicles and the development of charging infrastructure.

·       PLI Scheme for Automobile and Automotive Components (PLI-Auto): Introduced in 2021, this scheme provides financial incentives to promote domestic manufacturing and attract investments into the automotive manufacturing value chain.

·       EV 30@30 Initiative: With a goal to achieve at least 30% new EV sales by 2030, this initiative aims to expedite the deployment of electric vehicles across the country.


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