New Govt Scheme to Promote Local Production of Electric Cars Under Works

The new program will offer incentives to electric car makers based on their investments in Indian plants

In a fresh effort to boost local manufacturing of electric vehicles in India, the Government of India is in the process of drafting a new incentive policy. The new policy will come as an additional benefit over the perks provided by the FAME II program by the Government of India. It should be noted that the new incentive exclusively aims to help the manufacturers of electric four-wheelers in the country.

The ongoing work on the new policy has been mentioned in a new report by The Economic Times. Citing senior officials in the government, the report states that the Department for Promotion of Industry and Internal Trade (DPIIT) now plans to subsidise electric four-wheeler makers in India to boost the local production of electric cars.

Operating under the Ministry of Commerce & Industry, DPIIT plans to provide these incentives to electric carmakers based on their investments made for producing electric vehicles in the country. Internal discussions are being held to figure out the threshold of investment required by carmakers to be eligible for the subsidy scheme.

Once active, the new program aims to boost both local production of EVs as well as employment levels in the industry and the country at large. Since the cars will be locally manufactured, it is also expected to bring down the prices of these EVs substantially, as compared to the CKD and CBU units.

The move comes at a time when two major EV carmakers – Tesla and VinFast, are gearing up to set up their EV production base in India. If the subsidy program goes live soon, both are expected to benefit immensely through the incentives, while also getting an easier pass to a new market.

“Unlike FAME II (Faster Adoption & Manufacturing of Electric Vehicle), which is an upfront subsidy paid to consumers, this will be a manufacturing incentive,” a senior government official told ET. “The government is looking at extending incentives to vehicle manufacturers linked to the investments made by them to manufacture electric cars locally.”