Indias New EV Policy: Driving Global Manufacturing and Sustainability

New Delhi, March 15: India's recently approved electric vehicle (EV) policy has generated excitement among industry experts, who believe it will revolutionize the country's automotive sector and position India as a global manufacturing hub for future mobility solutions. The policy aims to attract major global players, including US-based Tesla, by offering duty concessions to companies that set up manufacturing units in India with a minimum investment of USD 500 million.

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Encouraging Global Investment and Technological Advancement

Shradha Suri Marwah, President of the Automotive Component Manufacturers Association (ACMA), welcomed the new EV policy, highlighting its potential to accelerate the adoption of cutting-edge technology and foster innovation in India's automotive sector. She emphasized the policy's focus on attracting global EV majors to invest in India while also ensuring the creation of a robust domestic supply-side ecosystem through significant Domestic Value Addition (DVA) criteria.

Driving Sustainable Manufacturing and Carbon Reduction

Aligned with the government's vision of reducing carbon footprint, promoting sustainable manufacturing, and achieving net-zero emissions by 2070, the policy sets the stage for India to become a vibrant global manufacturing hub for future mobility. ACMA, representing over 850 manufacturers contributing to more than 85% of the auto component industry's total turnover, sees this policy as a significant step towards achieving these goals.

Enhancing EV Adoption and Cost Competitiveness

Shamsher Dewan, Senior Vice President and Group Head of Corporate Ratings at Icra, believes the policy will facilitate enhanced EV adoption by providing access to global technologies, expanding the product range, and improving cost competitiveness. Icra currently projects that approximately 15% of new car sales in India will be electric by 2030.

Boosting Localisation and Vendor Ecosystem Development

Dewan also highlighted the importance of developing a local vendor ecosystem for EV adoption, similar to countries that have been front-runners in EV adoption. The policy's focus on increasing EV components localisation in India, currently at 30-40%, is seen as a step in the right direction.

Streamlined Process and Transparent Standards

Ashraya Rao, Partner at Khaitan & Co., believes the policy will assist new players in strategizing their India entry and efficiently allocating capital. Saurav Kumar, Partner at Induslaw, anticipates that the policy will benefit new-age automakers like Tesla, Rivian, and Lucid, who have advocated for reduced import duties in exchange for their commitment to the Make in India initiative.

Making India a Global EV Manufacturing Powerhouse

Raman Bhatia, Founder and Managing Director of Servotech Power Systems, expressed optimism that the policy will transform India into a global powerhouse for EV manufacturing. He emphasized the policy's focus on prioritizing domestic manufacturing, encouraging competition, and fostering growth, which will create opportunities for increased EV adoption across the nation.

Tesla's Potential Entry and Market Growth

The new EV policy has garnered significant attention from global players, including Tesla. The US EV giant has been seeking tariff concessions to offset customs duties on imported cars, a precondition for establishing a manufacturing plant in India. India's fast-growing EV market, projected to reach one crore units in annual sales by 2030 and create five crore direct and indirect jobs, presents an attractive opportunity for global EV manufacturers.

Promoting India as a Manufacturing Destination

According to an official statement, companies setting up manufacturing facilities for electric vehicles will be allowed to import a limited number of cars at lower customs duty. The policy aims to promote India as a manufacturing destination for EVs and attract investment from reputed global EV manufacturers.

Mahindra & Mahindra's Perspective

A spokesperson from Mahindra & Mahindra expressed support for the new EV policy, stating that it reinforces the Make in India momentum with requirements for bank guarantees, minimum investment commitment, and local value addition. The spokesperson highlighted the company's commitment to launching cutting-edge Born Electric SUVs in January 2025.

India's new electric vehicle policy represents a bold step towards transforming the country's automotive industry and positioning it as a global hub for future mobility solutions. By attracting global investment, promoting technological advancement, and fostering sustainable manufacturing, the policy aims to accelerate EV adoption and reduce carbon emissions. With the potential entry of major global players like Tesla, India is poised to become a key player in the global EV market.