Policy Highlights – Scheme to Promote Manufacturing of Electric Passenger Cars in India
- Customs duty reduced from 70–100% to 15% on completely built electric 4-wheelers priced ≥ $35,000.
- Valid for 5 years, with annual cap of 8,000 units at concessional duty.
- Eligibility tied to:
- Minimum ₹4,150 crore investment within 3 years.
- Localisation mandates: 25% domestic manufacturing in 3 years, 50% in 5 years.
- Total duty foregone capped at ₹6,484 crore.
Relevance : GS 2(Governance) , GS 3(Technology)
Concerns Over Ecosystem Impact
- Critics fear policy favours foreign capital without guaranteed technology transfer.
- Experts like Shouvik Chakraborty (UMass) argue:
- India must avoid becoming a mere component assembly hub.
- EV ecosystem building needs R&D, innovation, and skilling, like China and South Korea.
- Dinesh Abrol (JNU) notes no foreign firm has ever built another country’s ecosystem voluntarily.
- Success in China/S. Korea came from state-led innovation ecosystems and strategic industrial policy.
Market Structure and Policy Mismatch
- EV sales breakdown in FY25 (FADA data):
- 7.8% of total vehicle sales were EVs.
- Electric 3-wheelers: 57% of their segment.
- Electric 2-wheelers: 6.1% of segment.
- Passenger 4-wheelers: Only 2.6%.
- Commercial EVs: 0.9%.
- India is the largest market for electric 3-wheelers globally (IEA 2024).
- Critics warn that policy emphasis on high-end 4-wheelers may overlook mass transport and low-cost EV segments.
Domestic Industry Concerns
- Tata Motors opposed Tesla’s duty cut proposal:
- Said it would “vitiate” the local investment environment.
- Asked for more policy support for early-stage Indian EV companies.
- 2024 production data (IEA EV Outlook):
- Tata & Mahindra made over 80% of India’s EV cars.
- <15% of EVs imported (mainly Chinese) due to high duties and competitive local models.
Key Takeaways
- The scheme aims to attract foreign EV majors, but must balance domestic industry protection, technology transfer, and ecosystem building.
- Focus should expand beyond premium 4-wheelers to cover two-wheelers, three-wheelers, and public EV infrastructure.
- Local capacity-building, innovation, and mass-market EV adoption must remain central to India’s EV future.
