EV Manufacturers Must Have ₹10,000 Crore Revenue to Qualify for Incentives Under New Policy

EV Manufacturers Must Have ₹10,000 Crore Revenue to Qualify for Incentives Under New Policy is the key requirement introduced by the Government of India’s Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). Notified on June 2, 2025, by the Ministry of Heavy Industries, this policy aims to rapidly scale India’s electric vehicle (EV) manufacturing capability. In simple terms, any EV maker must show global automotive manufacturing revenue of at least ₹10,000 crore (approx. USD 1.2 billion) and global fixed assets of at least ₹3,000 crore in audited financials to be eligible for financial benefits.

By setting these thresholds, India ensures that only financially robust companies—global OEMs and well-funded domestic players—access incentives such as concessional import duties, capital subsidies, and support for achieving Domestic Value Addition (DVA) milestones. The ultimate goal is to attract major EV manufacturers, generate local jobs, and build a strong supplier ecosystem, pushing India toward its 30% EV penetration by 2030 target under the Net-Zero by 2070 commitment.

Background: Why Focus on EV Manufacturing?

India’s transportation sector contributes roughly 14% of national greenhouse emissions, with passenger vehicles being a substantial part. To reduce air pollution and meet climate goals—Net-Zero by 2070 and 30% EVs by 2030—India needs a strong domestic EV manufacturing base.

Under the earlier FAME-II scheme, incentives targeted buyers of two- and three-wheelers, but high import duties (70–100%) on premium EVs made India less attractive for global OEMs. As a result, most premium EV brands opted to import CBUs at high cost rather than set up local plants. To correct this imbalance and encourage “Make in India” investments, the government launched SPMEPCI, shifting incentives to manufacturers who commit to significant local investment and supply chain development.

Eligibility Criteria: What Makes a Company Eligible?

To qualify under SPMEPCI, EV manufacturers must satisfy three main requirements:

1. Global Revenue Threshold: ₹10,000 Crore

• Definition: Consolidated global revenue from automotive manufacturing must be at least ₹10,000 crore in the latest audited financial year.
• Purpose: Ensures applicants are financially strong, preventing shell companies or small startups without scale from claiming benefits.

How to Prove It: Submit audited consolidated financial statements (Income Statement and Balance Sheet) clearly showing automotive revenue ≥ ₹10,000 crore.

2. Global Fixed Assets Requirement: ₹3,000 Crore

• Definition: The applicant group must have gross block (net carried value) of at least ₹3,000 crore in automotive-related fixed assets worldwide—factories, machinery, R&D centers, etc.
• Exclusions:
  • Land acquisition costs are excluded.
  • Charging infrastructure investments are limited to 5% of the total committed capital.

Why This Matters: Verifies that applicants already have meaningful manufacturing capacity and can handle large-scale EV projects.

3. Capital Investment Commitment: ₹4,150 Crore

• Requirement: Approved manufacturers must invest ₹4,150 crore in new EV manufacturing facilities in India within three years of approval.
• Eligible Investments: Includes plant construction, machinery and equipment, R&D centers, tooling, and testing labs.
• Exclusion: Land cost is not covered under this ₹4,150 crore.

Note: Charging stations and related infrastructure can be part of the project but are capped at 5% of the total investment.

Incentives Offered: How the Policy Helps Manufacturers

A. Concessional Customs Duties on CBUs

• Benefit: Approved manufacturers can import up to 8,000 Completely Built Units (CBUs) of electric four-wheelers (minimum CIF value USD 35,000) at a 15% customs duty, compared to 70–100% otherwise.
• Duration: Valid for five years from the date of approval.
• Impact: Reduces entry-barrier costs for premium EV brands, allowing them to test the Indian market, gauge consumer preferences, and plan local production.

Example: A CBU worth USD 50,000 would attract a 70% duty (≈USD 35,000) normally. Under SPMEPCI, it’s 15% (≈USD 7,500), saving USD 27,500 per unit.

B. Domestic Value Addition (DVA) Milestones

• Targets:
  1. 25% DVA within 3 years of approval.
  2. 50% DVA within 5 years of approval.
• Definition: DVA measures the percentage of a vehicle’s manufacturing cost sourced from Indian components.
• Why It’s Crucial:
  • Boosts Local Suppliers: Creates demand for Tier-1/Tier-2 component makers—batteries, motors, inverters.
  • Skill Development: Encourages upskilling of the local workforce in EV technologies.
  • Supply Chain Resilience: Reduces dependence on critical imports, especially for battery cells and electronics.

Penalties:

• Failure to meet DVA milestones can lead to financial penalties, revocation of duty concessions, or disqualification from the scheme.

C. Capital Subsidies and R&D Support

• Capital Subsidy: Up to 5% of capital expenditure directed toward R&D centers, testing labs, and advanced manufacturing lines.
• R&D Grants: Available for projects in battery technology, lightweight materials, and software integration.

Benefit: Encourages innovation and reduces overall project costs by sharing some R&D expenditure.

D. Skilling and Workforce Development

• Collaboration with Skill Bodies:
  • NSDC (National Skill Development Corporation): Launches EV technician courses covering battery pack assembly, power electronics, and safety.
  • ASDC (Automotive Skill Development Council): Certifies training for assembly-line workers, QA inspectors, and service technicians.

Outcome: Ensures a ready pool of skilled professionals to support large-scale EV manufacturing.

How to Apply: Step-by-Step Guide

1. Monitor the Notice Inviting Applications (NIA)
   • The Ministry of Heavy Industries publishes the NIA on https://heavyindustries.gov.in.
   • Application Window: 120 days from the NIA release; extendable to March 15, 2026.
2. Prepare Documentation
   • Audited Financial Statements: Consolidated global revenue ≥ ₹10,000 crore and fixed assets ≥ ₹3,000 crore.
   • Board Resolution: Approval for scheme participation.
   • Project Report: Detailed business plan covering:
     • ₹4,150 crore investment breakdown (plant, machinery, R&D).
     • DVA roadmap with sourcing plans.
     • Technical credentials and manufacturing capacity details.
3. Pay Application Fee & Bank Guarantee
   • Application Fee: ₹5 lakh (non-refundable).
   • Bank Guarantee: Equal to the estimated duty foregone or ₹4,150 crore, whichever is lower, to ensure genuine commitment.
4. Submit Online Application
   • Upload all documents via the e-Governance portal provided in the NIA.
   • Adhere to file format guidelines: PDFs for reports, Excel sheets for financials, and scanned affidavits where necessary.
5. Evaluation Process
   • A committee—officials from the Ministry, Department of Revenue, and independent experts—evaluates applications.
   • Criteria: Compliance with revenue/assets thresholds, technical feasibility, investment plan, and DVA strategy.
   • Timeline: Decisions usually announced within 60 days of application closure.
6. Post-Approval Compliance
   • Import CBUs (up to 8,000/year) at 15% duty for five years.
   • Invest ₹4,150 crore in new facilities within three years; maintain progress records.
   • Submit annual DVA reports, audited by government-approved agencies.
   • Coordinate with nodal agencies for inspections, clarifications, and further support.

Key Challenges and Mitigation Strategies

Challenge 1: High Entry Barrier for Startups

• Issue: Many domestic startups cannot meet the ₹10,000 crore revenue and ₹3,000 crore asset thresholds.
• Mitigation:
  • Joint Ventures: Partner with eligible OEMs to leverage their financial strength and manufacturing expertise.
  • Contract Manufacturing: Outsource production to established facilities, focusing on R&D or branding.
  • Alternate Schemes: Use FAME-II or PLI programs to grow until eligibility is met.

Challenge 2: Supply Chain Bottlenecks

• Issue: Domestic capacity for battery cells, power electronics, and other critical EV components is limited.
• Mitigation:
  • Expand the Advanced Chemistry Cell (ACC) program to set up gigafactories.
  • Provide PLI incentives for component manufacturers to enhance local capacity.

Challenge 3: DVA Measurement and Auditing

• Issue: Lack of standardized guidelines can lead to disputes and delays in DVA certification.
• Mitigation:
  • Issue clear DVA calculation guidelines in consultation with industry bodies (SIAM, ACMA).
  • Mandate third-party audits by government-approved agencies to ensure transparency.

Challenge 4: Infrastructure Constraints

• Issue: Land acquisition delays, inconsistent power supply, and logistics challenges can slow plant setup.
• Mitigation:
  • Establish Dedicated EV Manufacturing Parks with ready infrastructure.
  • Offer subsidized power tariffs for EV plants.
  • Upgrade road and rail connectivity in key automotive hubs (e.g., Chennai, Pune, Gurgaon).

Challenge 5: Regulatory Clarity

• Issue: Frequent changes in duty structures or ambiguous guidelines can deter long-term investments.
• Mitigation:
  • Publish time-bound policy documents with minimal mid-course corrections.
  • Implement a single-window clearance mechanism for approvals and environmental clearances.

Real-World Examples

Mercedes-Benz: Phased Entry Strategy

• Global EV Sales (2024): Over 100,000 units.
• Approach Under SPMEPCI:
  1. Import CBUs like the EQE under 15% duty to understand market demand.
  2. Evaluate Feedback: Collect customer insights on features and pricing.
  3. Local Investment: If demand is strong, invest in a ₹4,150 crore facility for assembly by 2026.

Tata Motors: Leveraging Scale

• Domestic Leader: Holds 60% share of India’s EV passenger car market.
• Eligibility: Already exceeds ₹10,000 crore revenue and ₹3,000 crore assets.
• Plan:
  • Expand the Pune plant to produce 200,000 EVs/year.
  • Secure local suppliers to achieve 50% DVA by 2030.

These examples illustrate how established OEMs leverage SPMEPCI to enter or expand in India, while startups may need creative partnerships to participate.

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Frequently Asked Questions (FAQs)

Q1. Why ₹10,000 crore revenue?

The ₹10,000 crore threshold ensures that only financially stable and experienced manufacturers receive incentives, reducing the risk of firms without real capabilities extracting benefits.

Q2. Can two-wheeler EV makers apply?

No. SPMEPCI is designed exclusively for electric four-wheelers with a minimum CBU value of USD 35,000. Two- and three-wheeler makers should explore FAME-II or PLI incentives.

Q3. What happens if DVA targets aren’t met?

Failing to meet 25% DVA in 3 years or 50% in 5 years can trigger financial penalties, loss of duty concessions, or disqualification from the scheme.

Q4. When does the application window open?

As of June 3, 2025, the government has not announced a start date. Stakeholders should monitor https://heavyindustries.gov.in. The window remains open for 120 days, extendable to March 15, 2026.