New and existing players will be able to benefit from this policy and other schemes.
Published on Mar 18, 2024 11:27:00 AM
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The Government of India has finally announced the much-awaited new electric vehicle policy, which was known in industry circles as the ‘Tesla policy’. In all fairness, it's a very well-balanced one, and one that may put India on the global EV manufacturing map yet again.
This move may facilitate the likes of Tesla and VinFast to seed their brands in a highly competitive market, and it's also expected to invite billions of dollars of foreign direct investment (FDI) into the EV manufacturing space in the coming decade, which will be executed with a strong local auto parts ecosystem. What's more, it is not just new players who can avail of benefits from this policy but also existing players who plan to invest in EVs, thereby ensuring a level playing field.
The development is likely to incentivise the likes of Foxconn and MG Motor (through JSW), besides Tesla and VinFast, to bring in global models quickly into the Indian market, at an attractive price. It could even attract mainstream players like Ford and Volkswagen to invest in the Indian electric vehicle market.
In India, global vehicle makers see an economy that is poised to be the fastest growing among large economies, with a growing per capita and large consumer base, with sub-optimal cars per capita. Add to that its low manufacturing cost base, mature automotive component ecosystem, and now, favourable manufacturing policies, and the country has all the right ingredients to be a competitive manufacturing base to cater to global markets.
Surely, almost every multinational company is likely to use India as an export base for EVs. With EVs expected to account for 15-20 percent of the market by the end of the decade, it will be large export volumes that will drive the viability of local EV manufacturing.
Market leader Maruti Suzuki has announced, even before launching its first EV in India – the eVX – that it will be exporting its made-in-India EVs to Europe and Japan. Suzuki’s rival Honda Cars India is also developing the Asian Compact Electric Vehicle platform that will serve global markets. The likes of Hyundai, Kia, Toyota, Stellantis and Volkswagen have EVs on their radar that they plan to ship globally.
The scheme that lowers import tax, which was earlier opposed by multiple domestic vehicle manufacturers, appears to be fair, given the higher price threshold of USD 35,000 (around Rs 30 lakh), and the quantum of vehicles being capped at 8,000 units per annum. Tata Motors and Mahindra & Mahindra – the early movers in the EV space – are already being shortlisted to gain from the Government of India’s production-linked incentive scheme – a 13-18 percent benefit will allow the homegrown carmakers to offer close to half a dozen alternatives between them within the next three years.
The move is set to galvanise the Indian electric vehicle ecosystem and spoil consumers with the best of both worlds. They will not only get to choose a zero-emissions personal mobility vehicle from Tesla and VinFast but also compel legacy players like Tata, Mahindra, Maruti, and Hyundai to offer a competitive model with a highly localised solution.
Also see:
Nissan, Honda join hands for EV development