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India's EV Push Stalls: Why Automakers Wait for EU Trade Deal Clarity

Global car companies are hitting pause on India's electric vehicle manufacturing scheme. They're waiting to see the final terms of the trade deal being negotiated with the European Union. The companies have raised several practical concerns, from sourcing key materials to meeting strict investment timelines. For now, the government says it's not changing the scheme's rules or reopening applications.

Key Points: EV Scheme Momentum Awaits India-EU FTA Finalization Says Govt

  • No automaker applied by the October deadline despite government outreach efforts
  • Firms seek clarity on FTA terms before committing to required Rs 4,150 crore investment
  • Industry concerns include restrictions on rare-earth magnets affecting local value addition
  • Government states no plans to revise import duty concession or reopen the application window
2 min read

EV car manufacturing scheme to gain momentum after India-EU FTA: Govt

India's electric vehicle manufacturing scheme sees zero applicants as global automakers cite uncertainty over the pending India-EU Free Trade Agreement as a key hurdle.

"Companies told the Government that the uncertainty around the India-EU FTA was a major factor behind their hesitation. - Article Content"

New Delhi, Dec 2

The scheme to promote manufacturing of electric passenger cars (SPMEPC) is expected to gather momentum only after the India-EU Free Trade Agreement (FTA) is finalised, as global automakers prefer to wait for clarity on the trade deal before committing investments, the Parliament was informed on Tuesday.

In a written reply to Lok Sabha, Minister of State for Heavy Industries Bhupathiraju Srinivasa Varma informed that several companies have indicated they will decide on joining the scheme once the FTA terms are settled.

Despite the October 21 deadline, no automaker submitted an application. Companies told the Government that the uncertainty around the India-EU FTA was a major factor behind their hesitation.

They also raised concerns about restrictions on rare-earth magnets, which may affect their ability to meet Domestic Value Addition (DVA) requirements.

In addition, firms pointed out that the mandated investment levels and timelines under the scheme could be difficult to meet.

The Heavy Industries Ministry said it has carried out extensive outreach to encourage participation.

This included consultations during the scheme’s design, coordination with Invest India and various ministries, and communication through Indian embassies in countries where major global automakers are headquartered.

A recent stakeholder meeting was also held to resolve industry queries after the scheme failed to attract applicants.

Regarding the proposed 15 per cent import duty concession for EVs in exchange for investments of Rs 4,150 crore, the Government clarified that no revisions are being considered at present.

It also said that while it has not formally assessed the impact of the ongoing India-EU negotiations, companies themselves have linked their decisions to the outcome of the trade talks.

The Ministry added that there is currently no plan to reopen the application window or modify the conditions of the SPMEPC scheme.

- IANS

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Reader Comments

P
Priya S
The concern about rare-earth magnets is very real. We are too dependent on China for these critical minerals. Unless the government has a solid plan for sourcing or manufacturing these components locally, the DVA requirements will be a major hurdle. Need more focus on the entire supply chain, not just final assembly.
V
Vikram M
So the scheme got zero applications? That's disappointing. We keep announcing these grand plans but the conditions seem too tough for companies. If we want to be a global EV hub, we need to be more flexible and supportive, especially in the initial phases.
S
Sarah B
From an investment perspective, this makes complete sense. No major automaker will commit that level of capital amidst trade uncertainty. The outreach by the Ministry is good, but the policy needs to be aligned with the FTA outcome. Patience is key here.
R
Rohit P
Good! Let the FTA happen first. We should not give away import duty concessions without getting solid manufacturing commitments in return. The 'Make in India' vision should be non-negotiable. Jai Hind!
K
Kavya N
While I understand the wait-and-see approach, we are losing precious time. China is racing ahead in the EV space. We need to create an environment that attracts investment NOW, with some assurances. The timelines for investment seem very tight, maybe they can be reviewed?

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