India will give about $3.5 billion (about Rs. 25,735 cores) in incentives to automakers over a five-year period under a revised scheme to boost clean-tech vehicle manufacturing and export, two sources aware of the latest proposal told Reuters.
The government’s original plan was to give around $8 billion (about Rs. 58,830 crores) to automakers and parts manufacturers to primarily promote gasoline technology, with additional benefits for electric vehicles (EVs).
The scheme has been redesigned to focus on companies that build electric and hydrogen-powered vehicles, Reuters reported on Friday.
It wasn’t clear why the allocation was revised, but one of the sources said that as the focus shifted to clean and advanced technology, fewer companies would be eligible for the incentives.
India sees clean automotive technology as central to its strategy to reduce its dependence on oil and cut debilitating pollution in its major cities, while meeting its emissions commitments under the Paris Climate Agreement.
National automaker Tata Motors is India’s biggest seller of electric cars, with rival Mahindra & Mahindra and motorcycle companies TVS Motor and Hero cementing their EV plans.
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.
A government official with direct knowledge of the matter said that the initial allocation over the five-year period was reduced, but that up to $8 billion (about Rs. 58,830 crores) could be made available if the scheme were successful, initial funds are spent, and certain conditions are met.
The official did not specify these conditions, and India’s ministries of industry and finance did not immediately respond to an email asking for comment.
Details of the scheme, part of India’s broader $27 billion program (about INR 1,98,605 crores) to attract global manufacturers, could be made public next week, the two sources said.
Under the revised scheme, qualifying companies will receive cash back payments equivalent to about 10 percent – 20 percent of their sales for electric vehicles and hydrogen fuel cell cars, one of the sources said.
Automakers would need to invest a minimum of around $272 million (approximately Rs. 2,000 crores) over five years to qualify for payments.
Auto parts manufacturers will have incentives to produce components for clean cars and to invest in safety-related parts and other advanced technologies such as sensors and radars used in connected vehicles.
© Thomson Reuters 2021