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EV production UPSC NOTE

 EV Policy

  • The policy broadly clears the path for global EV makers like Tesla and Chinese EV maker BYD to foray into the Indian markets. 

  • The central goal of this policy is to enable transitioning to localised production in a commercially viable manner and plan as per local market conditions and demand

  • The most significant provision is the reduction of import duty on electric vehicles imported as a Completely Built Unit (CBU) with a minimum cost, insurance and freight (CIF) value of $35,000 to 15% (for a five-year period) from the present 70%-100%. 

  • This is provided the maker sets up a manufacturing unit within three years

  • The policy also stipulates that a total duty of ₹6,484 crore or an amount proportional to the investment made — whichever is lower— would be waived on the total number of EVs imported. 

  • It must be noted that, a maximum of 40,000 EVs can be imported under the scheme at not more than 8,000 units a year, provided the minimum investment made is $800 million. 

  • Another important aspect of the scheme is localisation targets

  • Manufacturers have three years to set up their manufacturing facilities in India. 

  • They are expected to attain 25% localisation by the third year of incentivised operation and 50% by the fifth year

  • Should the localisation targets not be achieved, and if the minimum investment criteria as defined under the scheme is not meet , the bank guarantees of the manufacturers would be revoked

Domestic Players

  • Tata Motors, in December 2023, had opposed the Tesla proposal. 

  • It argued that lowering duties would hit the domestic industry and “the investment climate will get vitiated.”

  • According to Deloitte India, most Indian players are leading in the segments below ₹29 lakh as of now, and hence this policy benefit (from 15% import duty) will likely be for Original Equipment Manufacturers (OEMs) catering to consumers in the higher end of the market 

  • The policy makes it lucrative for global EV players and Indian JVs with such players, to expand sales and manufacture in India.

Indian Market

  • Global players in India must consider local circumstances, like the environment, roads, and usage conditions 

  • While penetration in the two-and three-wheeler segment has been significant, passenger vehicles have seen only a 2.2% contribution thus far

  • This is mainly due to lack of proper charging infrastructure, range anxiety, and limited number of products in the affordable range due to limited localisation

  • The Confederation of Indian Industry (CII) in a July 2023 report had observed that India may require at least 13 lakh charging stations by 2030 to support “aggressive EV uptake.

  • The associated EV ecosystem must be made capable of addressing reliability and durability of components and service support

  • Liberalisation and globalisation currents acquiring increased hold of the components’ manufacturing system altered its manufacturing priorities

  • Appropriate product and system designs in case of two wheelers and three wheelers and four wheelers will have to guide PLI. 

  • Foreign capital would not easily meet this purpose. 

  • Indian manufacturers should be directed to this



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: EV production UPSC NOTE
EV production UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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