No Applications Received Under E4W Manufacturing Scheme: Govt

Minister of State (MoS) for heavy industries Bhupathiraju Srinivasa Varma yesterday confirmed that the government failed to receive any applications under the Scheme for Promotion of Manufacturing Electric Passenger Cars in India (SPMEPCI).

In a written reply before the Lok Sabha, Varma said that automakers cited the curbs on rare earth magnets, ongoing India-European Union (EU) free trade agreement (FTA) negotiations and investment thresholds as reasons for not participating in the scheme.

The MoS added that global original equipment manufacturers (OEMs) would participate in the initiative once the India-EU FTA is finalised. Additionally, they informed the ministry that the rare earth curbs as well as investment thresholds and timelines under the scheme would impact the achievement of domestic value addition (DVA) targets.

The last date to apply for the scheme ended on October 21. 

This follows the heavy industries ministry (MHI) undertaking extensive stakeholder outreach to encourage participation in this scheme. As part of this, the ministry invited feedback and circulated notices to embassies of the country, where the headquarters of major automakers are located.

In addition, the MHI also engaged officials of the external affairs ministry, commerce department and other state governments to create awareness about the scheme through various platforms and investment facilitation channels. However, the outreach appears to have found no takers.

Meanwhile, Varma said that the ministry so far is not considering any proposal to reopen the application window or adjust the contours of concessions under the SPMEPCI.

What Is SPMEPCI?

This follows the Centre approving the scheme in March last year to boost domestic manufacturing of electric vehicles (EVs). The SPMEPCI allowed global automakers to pay lower duty on imports of electric four-wheelers (E4Ws) if they committed to invest INR 4,150 Cr (about $500 Mn) in India.

Under the scheme, global OEMs will be allowed to import completely built-in units (CBUs) of E4Ws with a minimum CIF (cost, insurance and freight) of $35,000 at a reduced customs duty of 15% for a period of five years. 

The maximum number of E4W allowed to be imported at the lower duty rate was capped at 8,000 per year. 

However, applicants were required to set up an EV manufacturing unit and commence operations in the country within a span of three years from receiving approval. Additionally, OEMs were mandated to achieve a minimum DVA of 25% within three years and 50% within five years. 

Notably, only global entities, with a minimum annual revenue of INR 10,000 Cr from automotive manufacturing, and global investment companies, with minimum fixed assets of INR 3,000 Cr, were eligible to apply for the scheme.