With the explosive growth in electric vehicle sales and potential investments from Tesla and VinFast, India is looking to craft a policy to incentivize local production for low-carbon vehicles.
The Economic Times quoted unnamed officials saying that The Department for Promotion of Industry and Internal Trade of India is discussing with stakeholders to form a policy to subsidize electric four-wheeler (E4W) production in India based on related investments, aiming to create jobs and bring down car prices.
India launched the second tranche of the Faster Adoption and Manufacturing of Electric Vehicle (FAME II), which provides subsidies to eligible models and primarily benefits consumers rather than producers, while the rumored plan will offer fiscal support for suppliers to set up facilities.
After India's Prime Minister Narendra Modi visited the US, Tesla reportedly resumed talks with the Indian government for setting up plants in the South Asian country, and Reuters reported that India may slash the customs duty for imported electric vehicles as long as the automaker commits to some local manufacturing.
In early October, Vietnam-based VinFast said it would set up an assembly plant in India to capitalize on the South Asian's incentive scheme.
Besides FAME-II, India launched the Production Linked Incentive (PLI) schemes for low-carbon vehicles and their components and advanced chemistry cells.
According to the Vahan Dashboard, India sold nearly 10,000 E4Ws in the first ten months of 2023, doubling that for 2022, and electric vehicle's share in India's four-wheeler sales has grown from a little more than 0.1 in 2020 to nearly 1.5% in the first ten months of 2023.
E4W registrations in India | ||||||
Sales | 2018 | 2019 | 2020 | 2021 | 2022 | January-September 2023 |
Registrations (unit) | 2,455 | 1,927 | 4,220 | 14,601 | 42,960 | 96,632 |
Share of four-wheelers (%) | 0.05 | 0.05 | 0.12 | 0.36 | 0.76 | 1.49 |
Source: Vahan Dashboard, October 2023
