India Plans to Expand Incentives for EV Production

Automotive in India India Plans to Expand Incentives for EV Production

2024-12-02 From Thomas Günnel 2 min Reading Time

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India's major cities, especially the capital New Delhi, are repeatedly hit by severe air pollution. Now India wants to attract more electric vehicle (EV) manufacturers to the country. According to media reports, the government is planning new incentives to boost local production of EV models.

India aims to attract foreign EV manufacturers with additional incentives.(Bild:) — India aims to attract foreign EV manufacturers with additional incentives.
(Bild:)

India is reportedly planning to expand incentives for EV production to include automakers that manufacture their models in existing facilities within the country, according to a report by Reuters citing a source familiar with the matter. Previously, incentives were limited to manufacturers building new factories in India.

Previous Focus on Attracting Tesla

India’s earlier EV policy was designed to encourage Tesla to enter the market and establish local production facilities. However, Tesla abandoned its plans earlier this year.

Reduced Import Duties for Investments in India

In March, the Indian government introduced conditions for subsidies. Automakers could benefit from significantly reduced import duties if they invest at least $500 million (€473 million) in EV production within India and source half of the components locally. According to Reuters, import duties could then be reduced from 100% to 15% for up to 8,000 EVs annually.

New Incentives for Existing Plants

The government now reportedly plans to consider investments in EV production at existing factories that currently produce gasoline-powered and hybrid vehicles. The conditions require that EVs must be manufactured on a separate production line, and manufacturers must meet local sourcing criteria.For automakers building new factories, investments in machinery and tools for EV production would fully count toward the $500 million investment requirement, even if the equipment is used to produce other types of vehicles.

Minimum Revenue Target for Qualification

According to Reuters, the government will set a minimum revenue target for EVs produced at a plant or production line to qualify for the program. Volkswagen has reportedly stated that it is reviewing the new EV guidelines "in detail."mum Revenue Target for Qualification

Foreign Manufacturers Interested in Producing EVs in India

Other automakers are reportedly interested in producing electric vehicles in India, both in existing and new factories, according to Reuters. This information comes from the minutes of a meeting with India’s Ministry of Heavy Industries.A source, who remains unnamed, expressed optimism that future policies will support EV production by manufacturers such as Toyota and Hyundai. The new rules are expected to be finalized by March 2025.

List of Top 10 Car Manufacturers in India

Car Brand Name	Market Share
Maruti Suzuki	41.6%
Hyundai Motor Company	14.9%
Mahindra & Mahindra	11.4%
Toyota Motor Corporation	6.1%
Kia Corporation	5.5%
Honda	2,7%
Tata Motors	2.3%
MG Motors	1.4%
Skoda Auto	1.1%
Volkswagen	1.0%

List-Source: TATA AIG Team, 01/08/2024

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