Govt Explores R&D and Financial Support to Boost Premium EV Manufacturing

The government is assessing the potential for research and development (R&D) investments, in addition to financial support for establishing dedicated assembly lines for electric vehicles in current factories, to encourage automotive manufacturers under the initiative launched to enhance local production of premium EVs last year. The conclusions were made during a meeting with industry stakeholders that took place last week.

On March 15, 2024, India revealed a new initiative called the Scheme for Manufacturing Electric Cars (SMEC) aimed at promoting investments in domestic production of premium electric vehicles.

According to informed sources, during the recent final round of talks with industry stakeholders last week, the government reached an agreement on the extent of investments allowed to ensure that those working in India can effectively allocate resources to foster an ecosystem for electric vehicles.

A top source privy to the development said, "Investments in R&D, manufacturing of EVs in dedicated assembly lines in brownfield facilities have both been agreed upon." Companies are allowed to make investments of $500 million in a greenfield factory for manufacturing EVs from the date of approval under the scheme within the next three years to avail of concessional import duties under the scheme. The eligibility of investments under R&D mirror the qualifying criteria for auto production-linked incentive (PLI) scheme already in force.

While both Tesla and VinFast skipped the latest meeting between industry executives and authorities last week, nearly half-a-dozen players including Hyundai, Škoda-VW, Mercedes Benz India, Toyota have expressed interest in the scheme."Scheme guidelines will be released shortly," a senior official told sources.