How is India planning to localise EV manufacturing?, Pg10

What is the New EV Policy?

The Scheme to Promote Manufacturing of Electric Passenger Cars in India (2024–2029) aims to attract global EV manufacturers while promoting domestic production.

Key features of the scheme:

• Customs duty cut: Reduction from 70–100% to 15% on completely built electric cars (CBUs) priced at $35,000 or more.
• Time-bound imports: Benefit valid for five years and limited to 8,000 vehicles per year.
• Investment requirement: Minimum of ₹4,150 crore (~$500 million) within three years.
• Localisation targets:
• 25% of manufacturing to be done in India within 3 years.
• 50% within 5 years.
• Cap on duty foregone: ₹6,484 crore.

Does This Help India’s EV Ecosystem?

The policy may encourage foreign players like Tesla to enter the Indian market and localise production. It is positioned as a means to accelerate India's transition to clean mobility while boosting manufacturing and job creation.

Critical Concerns

1. Lack of Assured Technology Transfer: Experts point out that countries like China and South Korea succeeded by prioritising R&D, innovation, and skilling. The current policy lacks strong provisions to mandate technology sharing.
2. Focus Skewed Towards Four-Wheelers: Most Indian EV adoption has been in two-wheelers and three-wheelers. As per IEA data, India was the world’s largest market for electric three-wheelers in 2024, but the policy does little to support this segment.
3. Domestic Industry Concerns: Major Indian OEMs like Tata Motors oppose the policy, warning it may dilute investor confidence. Domestic manufacturers contributed over 80% of EV production in 2024, aided by high import duties and price-sensitive models.
4. Foreign-Capital Centric Design: Critics argue the scheme is overly focused on attracting foreign investment rather than nurturing local ecosystems, including MSMEs, startups, and domestic R&D.

Way forward

While the EV manufacturing scheme is a step toward opening India’s market and infrastructure for global firms, it must be accompanied by:

• Stronger localisation and technology transfer requirements.
• Broader support to the two- and three-wheeler EV segments.
• Dedicated R&D and skilling strategies.
• Incentives for domestic firms and MSMEs to innovate and scale up.

Mains Mock Question:

India’s EV policy aims to boost localisation while attracting foreign investment. Critically evaluate its effectiveness in promoting sustainable industrial growth and technological self-reliance.