MC EXCLUSIVE Foreign firms reluctant as EV policy runs into local sourcing, investment credit norm hurdles

The government on June 2 notified this EV policy, allowing companies to import a limited number of electric cars at a concessional import duty of 15 percent subject to certain riders

Almost a month after the portal for the Scheme to Promote Manufacturing of Electric Passenger Cars (SPMEPCI) was inaugurated, it is yet to receive an application, the government told the Lok Sabha on July 22.

The lack of interest stems from reluctance among foreign electric vehicle (EV) makers over a domestic value addition (DVA) mandate of 25 percent and the absence of a provision to take into account past investments, a government official told Moneycontrol.

“There is no interest from foreign players such as Volkswagen, Kia and Mercedes. We are worried that the scheme is there but there are no applicants,” the official said, adding the government is meeting EV makers to generate interest in the programme.

The SPMEPCI portal opened on June 24 but had got no response till July 16, the house was told. The portal will stay open for applications till October 21 and the scheme is not limited to foreign firms.

“We are examining what reasons are there. We have had two to three stakeholder consultations. There are many demands that are there… past investments should be considered, second is reduce DVA. DVA is already 25 percent we can’t lower it further then one could just go through the import route or open a showroom like Tesla,” this official said.

The official said despite the demands from EV makers, the government is not keen on tweaking the scheme further.

“We are not considering any changes to the scheme, we are waiting, maybe they (EV makers) will change their mind,” the official said.

The government on June 2 notified the EV policy, allowing companies to import a limited number of electric cars at a concessional import duty of 15 percent subject to certain riders like a minimum investment of Rs 4,150 crore.

First announced in March 2024, the scheme was modified by the heavy industries ministry to make it more attractive for major automakers and tighten eligibility norms.

It also requires manufacturers to source at least 25 percent of parts and components locally within three years of commercial production and 50 percent by the end of five years.

There is also a penalty for those who fail to comply with these DVA norms.