India's Transport Electrification Journey
On June 2, 2025, India introduced a concessional import duty of 15% on completely built-up electric vehicle (EV) units. This is part of India's broader strategy to enhance transport electrification and promote local manufacturing.
Conditions for Concessional Duty
- EV manufacturers must invest a minimum of ₹4,150 crore over three years.
- Manufacturers need to achieve a base domestic value add of 25% within three years, increasing to 50% in the subsequent two years.
- A maximum of 8,000 completely built units can be imported annually by each manufacturer for five years.
Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI)
- Announced in March 2024.
- Aims to boost EV adoption and manufacturing in India.
- Focuses on local manufacturing with the goal of increasing domestic value addition.
Challenges in Technology Transfer
Despite various policies, India faces challenges in technology transfer crucial for EV advancements. The approach to technology transfer is less developed compared to countries like China, which has effectively facilitated technology transfer via joint ventures and reduced import duties.
Global Context and Comparison
- China started its EV journey in 2009 and has become the largest EV market globally, with significant government incentives and mandatory joint ventures.
- The United States initiated its EV strategy in 2010, with substantial financial support expanded under the Biden administration.
- In 2024, China led global EV sales with 11.3 million units, followed by Europe (3.2 million) and the U.S. (1.5 million).
Path Ahead for India
To enhance EV adoption effectively, India must focus on localizing EV manufacturing similar to its strategy with internal combustion engine (ICE) vehicles. This includes forming joint ventures with local manufacturers and facilitating technology transfer for critical components like batteries.