Discover India’s 2025 EV Policy (SPMEPCI), a landmark scheme to boost electric vehicle manufacturing, attract global automakers, and drive sustainable mobility with reduced import duties and local production incentives
Introduction to SPMEPCI: India’s Flagship EV Policy
On June 2, 2025, India took a monumental step toward becoming a global hub for electric vehicle (EV) manufacturing with the notification of detailed guidelines for the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). First announced on March 15, 2024, this ambitious policy aims to attract global automakers, reduce carbon emissions, and align with India’s net-zero goal by 2070. With the promise of reduced import duties and significant investment incentives, the SPMEPCI is poised to reshape India’s automotive landscape.
Key Features of the SPMEPCI
The SPMEPCI offers a compelling framework to lure international EV manufacturers while fostering local production. Here are its core components:
- Reduced Import Duties: Companies investing at least ₹4,150 crore (approximately $500 million) in a local manufacturing plant can import up to 8,000 electric cars annually at a reduced customs duty of 15% (down from 70-100%) for five years, provided the cars have a minimum CIF value of $35,000.
- Investment Timeline: Approved applicants must establish manufacturing facilities and begin production within three years.
- Domestic Value Addition (DVA): Manufacturers are required to achieve 25% local content within three years and scale up to 50% by the fifth year, boosting India’s “Make in India” initiative.
- Capped Benefits: The maximum duty foregone per applicant is capped at ₹6,484 crore or the investment amount, ensuring fiscal responsibility.
- Bank Guarantee: Applicants must provide a bank guarantee to ensure commitment to the scheme’s objectives.
The policy also allows brownfield investments (upgrading existing facilities), addressing concerns from domestic players like Tata Motors and Maruti Suzuki, who lobbied for a level playing field.
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Who’s In and Who’s Out?
Global automakers like Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia have shown keen interest in leveraging the SPMEPCI to establish EV manufacturing plants in India. However, Tesla, a key target of the policy, appears unlikely to participate. Union Minister H.D. Kumaraswamy noted that Tesla’s focus remains on importing vehicles rather than local production, with the company securing showroom spaces in Mumbai but showing limited engagement in policy discussions.
Additionally, Vietnam-based VinFast’s $2 billion investment in Tamil Nadu does not qualify for SPMEPCI benefits, as it fails to meet specific eligibility criteria. Chinese automaker BYD also faces hurdles due to India’s cautious stance on Chinese investments, potentially limiting the policy’s global appeal.
Impact on India’s EV Ecosystem
The SPMEPCI is a cornerstone of India’s broader strategy to electrify transportation and reduce urban air pollution. By incentivizing local manufacturing, the policy aims to create jobs, transfer cutting-edge technology, and reduce reliance on imported components. It complements initiatives like the PM E-Drive Scheme, which plans to deploy 72,000 EV charging stations nationwide, and state-level policies like Maharashtra’s EV Policy 2025, targeting 30% EV penetration by 2030.
However, challenges remain. India’s EV sector faces infrastructure gaps, such as insufficient charging networks, and heavy dependence on imported components, particularly rare earth magnets from China. Domestic manufacturers like Tata Motors and Mahindra & Mahindra have expressed concerns about increased competition from foreign players, which could impact local OEMs and EV stock performance.
Critical Perspective: Opportunities and Roadblocks
While the SPMEPCI positions India as a potential EV manufacturing powerhouse, its success hinges on overcoming several hurdles. The absence of major players like Tesla and BYD may dampen its impact, as noted by analysts like Jay Kale from Elara Securities, who called it a potential “non-starter” without these giants. Geopolitical tensions, particularly with China, could disrupt supply chains for critical EV components. Additionally, the policy’s stringent DVA targets may challenge manufacturers in a market still developing its EV supply chain.
Despite these challenges, the SPMEPCI signals India’s commitment to sustainable mobility. By balancing global investment with local growth, it could pave the way for a vibrant EV ecosystem, provided infrastructure and policy execution keep pace.
Conclusion
India’s SPMEPCI is a bold step toward establishing the country as a global leader in electric vehicle manufacturing. With incentives for global automakers and a focus on local production, the policy aligns with India’s economic and environmental goals. While challenges like infrastructure gaps and geopolitical complexities persist, the SPMEPCI sets the stage for a transformative era in India’s automotive industry. As the application window opens in the coming weeks, the world will watch to see which automakers seize this opportunity to drive India’s EV revolution forward.
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