Will the EV Car Manufacturing Scheme Accelerate After the India-EU FTA?
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Synopsis
The scheme to enhance the manufacturing of electric passenger cars is anticipated to gain speed post the India-EU FTA finalization. With global automakers awaiting clarity on this trade deal, the future of EV manufacturing in India hangs in the balance, revealing the complexities of international trade and investment.
Key Takeaways
- SPMEPC aims to boost electric vehicle manufacturing.
- Global automakers await clarity on India-EU FTA.
- No applications were submitted by the October 21 deadline.
- Concerns over rare-earth magnet restrictions persist.
- The Government is not considering changes to the current scheme.
New Delhi, Dec 2 (NationPress) The initiative aimed at boosting the production of electric passenger vehicles (SPMEPC) is poised to gain traction only after the finalization of the India-EU Free Trade Agreement (FTA). This is due to global automotive companies preferring to wait for definite terms of the trade agreement before making any investment commitments, as communicated in Parliament on Tuesday.
In a written response to the Lok Sabha, Minister of State for Heavy Industries Bhupathiraju Srinivasa Varma revealed that multiple companies have indicated their intention to join the initiative, contingent upon the resolution of the FTA discussions.
Despite the deadline of October 21, no automaker submitted any applications. The companies cited the ongoing uncertainty surrounding the India-EU FTA as a significant reason for their reluctance.
There were also apprehensions regarding limitations on rare-earth magnets, which could hinder their ability to meet Domestic Value Addition (DVA) criteria.
Additionally, firms expressed concerns that the required investment levels and timelines set forth by the scheme may be challenging to fulfill.
The Heavy Industries Ministry stated that it has conducted comprehensive outreach efforts to stimulate interest in participation.
This outreach included consultations during the scheme’s formulation, collaboration with Invest India and various ministries, and communication through Indian embassies in countries hosting major global automakers.
A recent meeting with stakeholders was convened to address industry queries after the scheme failed to attract applications.
Regarding the proposed 15 percent import duty concession for EVs linked to investments of Rs 4,150 crore, the Government clarified that no modifications are currently under consideration.
Furthermore, while the impact of ongoing India-EU negotiations has not been formally evaluated, companies have connected their decisions directly to the outcomes of the trade discussions.
The Ministry confirmed that there are no plans to reopen the application window or alter the conditions of the SPMEPC scheme.
Point of View
It’s imperative we recognize that the future of electric vehicle manufacturing in India is closely tied to international trade agreements. The hesitation of global automakers to invest underscores the need for a stable and clear policy framework. It’s a pivotal moment for the nation’s commitment to sustainable transport solutions.
NationPress
02/12/2025
Frequently Asked Questions
What is the SPMEPC?
The SPMEPC is a scheme designed to promote the manufacturing of electric passenger cars in India.
Why are automakers hesitant to apply?
Automakers are waiting for clarity on the India-EU FTA, which significantly impacts their investment decisions.
What concerns do companies have regarding the scheme?
Concerns include restrictions on rare-earth magnets and the challenges of meeting investment levels and timelines.
What is the proposed import duty concession?
A 15 percent import duty concession for EVs is proposed in exchange for significant investments.
Will the application process be reopened?
Currently, there are no plans to reopen the application process or change the scheme's conditions.
