India to invite applications for electric car manufacturing by April, will Tesla apply?

This scheme was announced in March last year, and the government has been holding consultations with the industry on implementation guidelines. The Ministry of Heavy Industries, which is the nodal ministry in charge of this scheme, has now prepared draft guidelines for feedback.

Sources say the government could open the scheme for applications in late March or early April.

CNBC-TV18 has learned that, as per the proposed guidelines, investment in both greenfield and brownfield projects would be eligible, but the amount of committed investment—500 million dollars—would be mandatory for both greenfield and brownfield projects.

Applicant companies can spend 5% of the committed investment on charging infrastructure. The guidelines state that a company must achieve a minimum revenue of ₹7,500 crore by the fifth year of operation and ₹5,000 crore by the fourth year of operations.

The guidelines also propose a fine in case an approved applicant fails to meet the revenue criteria, which could range from 1% to 3% of the revenue shortfall. An inter-ministerial sanctioning committee is also likely to be formed for approving and monitoring the implementation of the scheme.

Sources have told CNBC-TV18 that Tesla has not participated in any recent stakeholder consultations regarding the electric car manufacturing scheme. The government has received representations from almost all global and domestic OEMs but not Tesla. However, the scheme will be opened within weeks, and the government is hopeful that Tesla, along with other OEMs, will apply.

As per the scheme, the committed investment for any OEM has to be ₹4,150 crore. A company can seek duty concessions on cars costing $35,000 or ₹30 lakh and above. This refers to the CIF cost, which is the cost of a shipped vehicle without the addition of duty.

If a company’s application is approved, the carmaker would get a 15% duty rate on 8,000 cars per year, but the company must start making cars in India by the third year of operations. The applicant must also achieve a domestic value addition of 25% within three years and 50% by the fifth year of operation.

According to estimates, if a company receives approval under this scheme, then with the concessional 15% duty and 5% GST, a $35,000 imported car would cost an Indian customer around ₹36 lakh, while an imported car costing $50,000 would cost around ₹52 lakh.

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