SPMEPCI Scheme Aims to Attract Global Makers with Investment and Localization Mandates
India has officially launched a new electric vehicle (EV) policy titled the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). The policy introduces a major reduction in import duties on electric vehicles, aiming to attract global players and bolster local manufacturing in the Indian EV sector.
Reduced Import Duty: From 110% to 15%—But with Conditions
Under the new EV policy, automobile manufacturers can now import electric cars with a reduced import duty of 15%, significantly lower than the existing 110% rate. However, to avail this benefit, companies must:
- Invest a minimum of USD 500 million (approx ₹4,150 crore) within three years.
- Use only fresh capital—previous investments will not count.
- Utilize existing manufacturing facilities, if available.
The concessional import duty will be available for five years, and during this period, carmakers must achieve specified revenue and localization milestones.
Revenue Milestones to Maintain Policy Eligibility
To remain eligible for reduced import duties, carmakers must achieve the following annual turnover milestones:
- Year 2: ₹2,500 crore
- Year 4: ₹5,000 crore
- Year 5: ₹7,500 crore
Failure to meet these targets could disqualify manufacturers from continuing in the scheme.
Localization Requirements: 50% Local Manufacturing by Year 5
The SPMPCI mandates progressive local value addition through domestic manufacturing:
- 25% localization by the end of year 3
- 50% localization by the end of year 5
This requirement is aimed at strengthening India’s manufacturing base and creating local supply chain ecosystems.
EVs Priced Above ₹30 Lakh Eligible for Duty Reduction
To protect domestic automakers, the 15% reduced import duty applies only to electric vehicles priced above USD 35,000 (approx ₹30 lakh). This ensures that affordable EV segments—currently led by local players—remain insulated from foreign competition.
EV models protected under this clause include:
- Tata Nexon EV, Punch EV, Harrier EV, Curvv EV
- Mahindra XUV.e9, BE.06
- MG Windsor, Hyundai Creta EV
- Upcoming models like Maruti e-Vitara, Sierra EV
Import Cap: Only 8,000 Units Annually at Concessional Duty
Each eligible manufacturer can import up to 8,000 electric vehicles per year at the reduced 15% import duty rate. Any additional imports will attract the standard 110% tariff.
Also, the total benefits claimed under the scheme must not exceed ₹6,484 crore or the actual investment made, whichever is lower. Unused quotas can be carried forward to the next year.
What Counts Toward the ₹4,150 Crore Investment?
The SPMPCI outlines clear investment criteria. Eligible expenses include:
- Machinery and manufacturing equipment
- Research and development facilities
- Charging infrastructure (up to 5% of total investment)
- Land and buildings (up to 10% of investment)
To qualify, a company must also have:
- Annual automotive-related revenue of ₹10,000 crore
- Global asset investments of at least ₹3,000 crore
Tesla May Skip; European and Korean Brands Show Interest
While Tesla could benefit from the new policy, reports suggest it may skip local manufacturing in India due to uncertainty tied to U.S. policy under the Trump administration. If so, Tesla would continue to export vehicles under the 110% import duty.
In contrast, brands like Volkswagen, Skoda, Hyundai, Kia, and Mercedes-Benz have expressed interest in leveraging the new SPMEPCI benefits to expand their EV footprint in India.
Online Portal Coming Soon for Manufacturer Applications
The Ministry of Heavy Industries is expected to launch a dedicated online portal where eligible carmakers can apply for approvals under the SPMPCI scheme.
With this policy, India is taking a strategic step forward to position itself as a global hub for electric vehicle manufacturing, while protecting domestic innovation and promoting sustainable growth.
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