Govt Includes R&D, Charging Infra Investments in EV Manufacturing Scheme

The government has broadened the scope of its flagship Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMPCI), now allowing automakers to include investments in research and development (R&D) and charging infrastructure as part of their total investment commitment.

These new inclusions, which weren’t part of the initial scheme announced in March 2024, are aimed at attracting global automakers to set up EV manufacturing facilities in India, while also encouraging the supporting ecosystem needed for electric mobility.

According to Kamran Rizvi, Secretary at the Ministry of Heavy Industries, when the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMPCI) was initially announced last March, there was no provision for EV charging infrastructure investment. Now, any investment made in R&D and charging infrastructure will be recognized as eligible under the scheme. Notably, while the PLI scheme does not currently include EV charging infrastructure, this scheme (SPMPCI) does, he said.

Under the updated guidelines, eligible investments now include manufacturing equipment and machinery, R&D facilities, charging infrastructure (capped at 5% of the total investment), and land and buildings (limited to 10% if part of the main EV manufacturing facility). Interestingly, dual-use facilities—such as paint shops or assembly lines used for both EVs and conventional vehicles—will also be considered part of the investment commitment.

The scheme, designed to support India’s climate goals and promote local job creation, offers automakers a reduced import duty of 15% on electric vehicles priced at $35,000 or more, down from the standard 70% rate. This benefit is capped at 8,000 vehicles per year for five years and is contingent on companies investing at least ₹4,150 crore (around $500 million) within three years of approval.

“Whoever wants to construct the factory, they have to invest ₹4,150 crore. They can do it in the same (existing) factory; only they have to make a new line specifically for EVs,” Kumaraswamy said.

Companies are also required to achieve 25% domestic value addition within three years and 50% within five years, to ensure the benefits of the scheme drive real manufacturing and technology transfer to India.

The Ministry of Heavy Industries will soon open an online application portal, with an initial window of 120 days for automakers to apply. Certification of domestic value addition will be managed by government-approved testing agencies, following protocols from existing automotive incentive programs.

In response to questions about whether Chinese carmakers will be allowed to apply for the scheme, Minister of Heavy Industries H.D. Kumaraswamy said, “The normal PN3 conditions of India will apply to investments from countries sharing land borders.”

So far, global automakers such as Mercedes-Benz, Volkswagen, Skoda, Hyundai, and Kia have formally expressed interest in India’s scheme to promote the manufacturing of electric passenger cars. However, the government has not received any indication of interest from Tesla.

“We are not actually expecting from them [Tesla]. They are planning to start with showrooms. They are not interested in manufacturing in India, as per the information available with us today,” Kumaraswamy said.

When the scheme was announced last year, many viewed it as a red carpet for Tesla, which has long objected to India's higher import duties on cars. The U.S. electric carmaker and Indian policymakers have been actively engaging over the past year, discussing potential investment and policy incentives.