Centre Issues e-4W Scheme Guidelines: Import tax cuts for local production; Mercedes, Skoda, Hyundai, Kia interested; will Tesla join club?

Modi Government EV Policy 2025 News: The central government on Monday issued guidelines for a scheme inviting investments of a minimum of Rs 4,150 crore ($500 million) from foreign automobile manufacturers to produce electric passenger cars in India. The scheme offers an opportunity to foreign auto makers to establish their production units and grab a share in the Indian automobile space. The programme will include include major import tax cuts for foreign auto companies committing to participate in the Narendra Modi government’s drive to push electric vehicle manufacturing in India. 

What is the Modi government’s revamped E-Vehicle policy all about?

Simply put, the programme will enable foreign auto makers to import a limited number of electric cars at an import duty of 15 per cent—sharply lower than the current 70 per cent duty—provided they commit to investing $500 million for three years to build EVs in the country, according to the Ministry of Heavy Industries.

Investments by companies from countries bordering China and India will be valid as per the Indian government’s current policies, according to the official communication.

When is the last date to apply for the Modi government’s E-Vehicle scheme?

The last date to apply for the scheme is March 15, 2026.

Which automobile companies are interested in participating in the scheme?

Until now, companies like Mercedes-Benz, Kia, Hyundai and Skoda have shown interest in the scheme, whereas Tesla has appeared keen on only opening its showrooms in the country.

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Minimum and maximum investment limit

While the scheme requires participants to commit a minimum investment of Rs 4,150 crore (equivalent of Rs 500 million), there is no maximum limit applicable to it. 

In March 2024, the government approved the scheme to attract investments in the e-vehicle space by reputed global EV makers.

Here are some of the key requirements mandated under the scheme: 

• The participating foreign auto makers will be allowed five years to take their commercial production of e-vehicles to 50 per cent domestic value-addition (DVA)
• They will also be required to achieve a localisation level of 25 per cent by the third year and then take it to 50 per cent by the fifth year
• A customs duty of 15 per cent—as applicable to completely knocked down (CKD) units—will be applicable for the five-year period
• Up to 8,000 EVs per maker per year will be allowed for import under this scheme