India has revised its proposed $8 billion (about Rs. 58,400 crores) scheme for the automotive sector, which will now focus on encouraging companies to build electric and hydrogen-powered vehicles, two sources familiar with the project told Reuters. flat.
This is a significant change from the government’s original plan to encourage auto and auto parts manufacturers to build primarily gasoline vehicles and their components for domestic and export sales, with some added benefit for electric vehicles (EVs).
The shift to cleantech comes as Tesla prepares to enter India and is lobbying to reduce import duties on electric cars. While the government is considering the request, it wants some economic benefit in return, which could include a commitment from Tesla to produce cars locally.
Under the new proposal, India will give automakers incentives to build EVs and hydrogen fuel cell cars only, the sources said.
“The government doesn’t want to spend money on promoting old technologies,” said one of the sources.
Auto parts manufacturers, however, will have incentives to produce components for clean cars, as well as to invest in safety-related parts and other advanced technologies, such as sensors and radars used in connected cars, automatic transmission, cruise control and other electronics, sources said.
“The idea is to promote the development of technology that is currently not manufactured in India, but is imported because regulations require or customers want these features in their cars,” said the second source.
The sources said the original incentive of around $8 billion could also be cut and that the production-linked scheme, which would apply to domestic sales and exports, could be finalized by the end of September.
India’s industries and finance ministries did not immediately respond to a request for comment.
India’s efforts to promote EVs, which represent a fraction of total car sales, have so far been blocked by a lack of investment and weak demand, as well as the patchwork nature of existing incentives that vary from state to state.
But the government is focused on embracing clean mobility so it can reduce its dependence on oil and reduce pollution, while fulfilling its commitment under the Paris Climate Agreement.
National automaker Tata Motors is currently the biggest seller of electric cars in India with rival Mahindra & Mahindra as well as motorcycle companies TVS Motor and Hero MotoCorp firming up their EV plans.
However, India’s biggest automaker, Maruti Suzuki, has no short-term plans to launch EVs as it sees no volumes or affordability for consumers, its president said last month.
The incentive scheme is part of India’s broader $27 billion program (about INR 1,97,100 crores) to attract global manufacturers so it can boost domestic production and exports.
© Thomson Reuters 2021