Mercedes-Benz, Volkswagen, Hyundai, Show Interest in India’s Electric Car Manufacturing Scheme

Global automakers including Mercedes-Benz, Volkswagen, Skoda, Hyundai, and Kia have formally expressed interest in India’s scheme to promote the manufacturing of electric passenger cars, according to Minister of Heavy Industries HD Kumaraswamy.

“Mercedes-Benz, Volkswagen, Skoda, then Hyundai and Kia — all these companies have already shown interest formally. Tesla, we are not actually expecting from them. They are only to start showrooms, they are not interested in manufacturing in India, as per the information that is with us today,” Kumaraswamy said.

The scheme, formally announced in 2024 by the Ministry of Heavy Industries, is designed to attract global investments into India’s electric vehicle sector and position the country as a manufacturing hub. It offers a reduced import duty of 15% on electric vehicles priced at $35,000 or more – down from the standard 70% — for a period of five years. This benefit is capped at 8,000 units per year and tied to a commitment from participating companies to invest at least ₹4,150 crore (around $500 million) within three years.

Under the scheme, companies must also commit to increasing domestic value addition over time – 25% within three years and 50% within five years. The policy stipulates that investments must go toward manufacturing facilities, machinery, research and development, and other eligible infrastructure – though land costs are excluded. Up to 5% of total investment can go toward charging infrastructure, with building costs capped at 10% if part of the main manufacturing plant.

There won't be any maximum limit on investments that can be made for R&D in the total committed investment, while for charging infra, maximum investment that can be made is upto 5%, the minister said.

“The scheme will help position India as a global hub for electric vehicles. It will promote local jobs and boost local manufacturing, while supporting India’s climate goal of net zero emissions by 2070,”  Kumaraswamy said.

The scheme’s application process is set to open soon, with an initial window of 120 days for submissions. Companies will have to pay a ₹5 lakh non-refundable application fee to participate. Kumaraswamy added, “We will know the real intent of companies when we open the application window and see who actually applies to invest and manufacture in India.”

Only large companies with at least 10,000 crore annual revenue from auto manufacturing and at least 3,000 crore investment in assets worldwide will be able to apply for the scheme, the minister said.

The government expects the policy to not only draw in foreign players but also foster technology transfer and local supply chain development, addressing a critical gap in India’s efforts to build a competitive domestic electric vehicle ecosystem. Applications for the scheme are expected to open in the coming weeks once the online portal is operational.