New EV Policy: Govt To Cap Investment Towards Charging Networks

The Centre’s soon-to-be notified electric vehicle (EV) policy reportedly plans to mandate foreign automakers to set aside only 5% of their total investment into the country towards creation of charging infrastructure.

As per draft rules seen by Reuters, the provision has been envisaged to ensure EV makers spend more on car manufacturing, rather than charging infrastructure. As such, if foreign automakers spend more than the 5% threshold, the additional deployment of funds will not be counted as their investment in the country.

“Expenditure incurred on charging infrastructure would be considered up to (a) maximum 5% of the committed investment,” read the 47-page draft document dated January 2025. 

For the uninitiated, the government announced the EV policy last year, effectively rolling out a red carpet for global EV giants including Tesla. Under the new proposed rules, foreign car makers can import EVs with just 15% to 20% import duties, as against up to 110% currently, if they invest at least $500 Mn (INR 4,150 Cr) towards building a unit in India. 

If latest reports are to be believed, EV makers cannot circumvent the proposed EV rules by spending merely on charging infrastructure. They will have to spend more towards scaling up manufacturing in the country. 

An industry insider reportedly said that the call is being taken as the government wants companies to prioritise manufacturing, and not just charging networks.

Nevertheless, the Centre is currently holding discussions with EV makers and other stakeholders on the draft norms. The rules are expected to be finalised by next month, a source reportedly added.

As per the report, the proposed rules also mandate EV makers to rake up a minimum turnover of $577 Mn by the end of fourth year of operations to be eligible for lower import duties on up to 8,000 electric cars per year. By the fifth year of operation, companies will have to meet the minimum threshold of $866 Mn.

The draft rules also specify that original equipment manufacturers (OEMs) failing to meet the turnover threshold will have to pay a penalty in the range of 1% to 3% of the revenue shortfall. 

This comes at a time when Elon Musk-led Tesla has once again kicked off plans to re-enter India. Earlier this week, reports said that the US-based EV giant has finalised two locations for showrooms in Delhi NCR and Mumbai, with the EV maker also looking to hire talent to bolster its bid to re-enter India. 

Meanwhile, the company is also said to be preparing to ship a few thousand electric cars to India in the coming months. If reports are to be believed, the company is in talks with states such as Gujarat, Maharashtra and Tamil Nadu to set up a unit. Andhra Pradesh government too has offered incentives such as “ready” land parcels to woo the company to the state. 

Not just Tesla, other foreign auto makers such as Hyundai and Toyota Motor are also mulling plans to manufacture EVs in the country at their existing and new factories.