The government of India has finally announced the much-awaited new electric vehicle policy. A scheme that was known in the industry circle as a Tesla policy – in all fairness – a very well-balanced 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 brand in a highly competitive market and is also expected to invite billions of dollars of global 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 only the new players who can avail of benefits from this policy, but the scheme is also open to existing players – who plan to invest in EVs thereby ensuring a level playing field.
The development is likely to incentivise the likes of Foxconn, M G Motor (through JSW), besides Tesla and VinFast, to bring in global models quickly into the Indian market at an attractive price. It could even evince interest of mainstream players like Ford and Volkswagen to invest in the Indian electric vehicle market – which has been on their radar.
In India, the global vehicle makers see an economy that is poised to be the fastest growing amongst large economies, with a growing per capita and large consumer base with sub-optimal car penetration.
Add to that – its low manufacturing cost base – matured automotive component ecosystem and now the favourable manufacturing policies – the country has all the right ingredients to be a competitive manufacturing base to cater to the global markets.
To be sure, almost every multinational company is likely to use India as an export base for EVs. With an EV penetration of just 15-20% expected by the end of the decade, it will be a large export volume that will drive viability.
The market leader Maruti Suzuki has already announced that before launching its EVs in India, it will be exporting them to the markets of Europe and Japan. Suzuki’s rival Honda Cars India too is developing the Asian Compact Electric Vehicle platform that will serve the global markets. The likes of Hyundai, Kia, Toyota, Stellantis, and Volkswagen, all have EVs on their radar, which are being planned to be shipped to global markets.
A level playing field
The scheme of lower import tax, which was earlier opposed by multiple domestic vehicle manufacturers – appears to be fair – given the higher price threshold of $35,000 or Rs 30 lakh and the quantum of vehicles being capped at 8000 vehicles per annum, with a lower import duty.
With the likes of Tata Motors and Mahindra & Mahindra – the early movers in the EV space – being already shortlisted to gain from the Government of India’s production-linked incentive scheme – a 13-18% benefit will allow the homegrown car makers to aggressively 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 the consumers with the best of both worlds.
They will not only get to choose a zero-emission personal mobility vehicle from the likes of Tesla and VinFast in the Indian market at attractive prices but also compel the legacy players like Tata, Mahindra, Maruti, and Hyundai to offer a competitive model with a highly localised solution.
Ketan Thakkar is Group Business Editor at Autocar India and Autocar Professional.
