CarOnPhone Car News India EV Policy Cuts Import Duty to 15%, Revives Local Production
CarOnPhone Car News India EV Policy Cuts Import Duty to 15%, Revives Local Production

India EV Policy Cuts Import Duty to 15%, Revives Local Production

Bijesh Nagesh

04 Jun 2025, 02:12 PM

India EV Policy Cuts Import Duty to 15%, Revives Local Production
India’s new EV policy is making waves in the automotive world by slashing import duty on premium electric vehicles from 110% to a competitive 15%.
The Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) requires a fresh investment of USD 500 million (approximately Rs 4,150 crore) within three years, along with clearly defined turnover and localization targets.
This initiative is designed to attract global automakers while boosting local manufacturing and safeguarding existing domestic players through strict eligibility criteria.

India EV Policy Cuts – Key Highlights

  • Import Duty Reduction: Premium electric vehicles priced above USD 35,000 (≈Rs 30 lakh) now enjoy a reduced import duty of 15% instead of 110%. 
  • Mandatory Investment: Companies must invest USD 500 million in new capacity over three years. 
  • Turnover Milestones: Targets include Rs 2,500 crore in year two, Rs 5,000 crore in year four, and Rs 7,500 crore in year five. 
  • Localization Requirements: Local value addition must reach 25% by year three and 50% by the end of year five. 
  • Annual Unit Cap: Reduced duty applies for up to 8,000 premium EVs every year. 

India EV Policy Cuts: Technical Specifications & Investment Details

The policy outlines detailed technical and financial benchmarks to ensure commitment from participating carmakers.
Below is a summary table highlighting the primary requirements:
ParameterRequirement
Investment ThresholdUSD 500M (Rs 4,150 crore) within 3 years
Turnover by Year 2Rs 2,500 crore
Turnover by Year 4Rs 5,000 crore
Turnover by Year 5Rs 7,500 crore
Localization by Year 3At least 25% local value addition
Localization by Year 550% local value addition
Premium EV Eligibility PriceAbove USD 35,000 (approx. Rs 30 lakh)
Annual Unit Cap8,000 units
Expenditures contributing to the investment include costs for research and development, machinery and manufacturing equipment, and specific allocations for charging infrastructure and facility improvements.
Notably, certain expenses—such as up to 10% for land and building costs—are counted toward the total investment.
This structured approach is expected to foster a robust supply chain while encouraging quality in domestic production.

India EV Policy Import Duty Cuts: Industry Implications

The revised policy is poised to reshape the Indian automotive industry by offering significant EV incentives for both global and domestic players.
Automakers can now balance a substantial import duty reduction with the strategic push for local manufacturing.
Enhanced localization targets, paired with rigorous turnover milestones, promise to drive technological innovation and streamline production processes while maintaining competitive pricing.

India EV Policy Cost Cuts: Global Impact and Future Outlook

Global automotive giants are taking note of this bold regulatory move. While firms like Tesla remain cautious amid broader market dynamics, several prominent companies are re-evaluating their regional strategies in light of these EV incentives.

The progressive conditions outlined in the SPMEPCI not only aim to lower operational costs but also encourage the adoption of advanced technology and eco-friendly manufacturing practices.

In the long run, this policy could catalyze a shift toward a more resilient and competitive electric mobility ecosystem in India.

The new framework is set to boost automotive investment and create a dynamic environment for electric vehicles.

With the anticipated online portal for seamless applications, interested carmakers will soon be able to initiate their participation by meeting the required benchmarks.

India EV Policy Price Cuts: Final Thoughts

Analysts predict that this reform will enhance market competition and may eventually lead to lower consumer prices for electric vehicles.

The policy is also likely to spur partnerships between international technology leaders and local industries, accelerating India’s journey toward sustainable transportation solutions.

This renewed focus on attracting quality investment and fostering innovation could well redefine the future of mobility across the region.

For more information, visit the Ministry of Heavy Industries.

For the latest car news, vehicle launch updates, and detailed explorations, check out CarOnPhone.

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electric cars ev policy Indian Govt

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