Govt likely to release new guidelines on EV policies

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The Indian government is in the final stages of drafting and finalizing guidelines for the implementation of the new electric vehicle (EV) policy, signalling a commitment to promoting electric mobility and creating a conducive environment for the growth of the EV industry in India.

“The guidelines are expected in the next three-four weeks…some of the OEMs (original equipment manufacturers) were asking if brownfields can be counted in the policy to get the benefits, as a part in the investment definition, so it will be discussed further while making the guidelines,” an official privy to the matter said, without naming any companies.

According to sources, the request from manufacturers include brownfields in addition to greenfields in the definition of investment likely stems from their desire to maximise benefits under the government’s electric vehicle (EV) policy. The request reflects manufacturers’ efforts to leverage existing assets and infrastructure to capitalise on the opportunities presented by the government’s EV policy, ultimately contributing to the growth of the electric vehicle industry in the country.

Brownfield sites are sites that have previously hosted industrial facilities, commercial buildings, or residential structures that are now vacant, abandoned, or underutilised. Greenfield sites have never been developed or built upon.

The official also noted that in theory, providing benefits based on brownfields would not be feasible. They emphasized that original equipment manufacturers (OEMs) would need to establish a distinct factory to qualify for the domestic valuation addition (DVA) of 25% within the initial three years.

The policy notification outlines certain financial requirements and incentives aimed at encouraging companies to invest in manufacturing facilities for EVs in India.

Here are the key points of investments

• Minimum Investment Requirement: a minimum investment threshold of ₹4,150 crores (approximately $500 million) for companies looking to establish manufacturing facilities in India and commence commercial production of EVs. To ensures companies make significant commitments to the Indian market and are eligible for the incentives provided under the policy.
• Domestic Valuation Addition (DVA) Targets: targets for achieving Domestic Valuation Addition (DVA), which refers to the percentage of locally sourced components used in the manufacturing process. Specifically, companies are expected to achieve a DVA level of 25% by the third year and 50% by the fifth year of operation.
• Customs Duty Incentives: To facilitate the achievement of DVA targets, the government has approved a customs duty of 15% applicable to completely knocked down (CKD) units.

The policy notification aims to attract significant investments in EV manufacturing, incentivize local production through DVA targets, and provide customs duty incentives to support the growth of the electric vehicle industry in India.

All the globally established players like Mercedes-Benz, BMW Group, Audi, Hyundai Motor, Jaguar Land Rover, and Volkswagen Group and newcomers such as VinFast, which is establishing a facility in Tamil Nadu, and Tesla, which is currently searching for land in the country, stand to benefit from the scheme as well, as they stand on the criteria of CKD units according to industry analyst.