Powerful Boost for EV Industry: Imported Electric Cars To Attract Only 15% Tax Instead Of 110% In India

By EV Update IndiaJun 21, 2025

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🚘 Imported Electric Cars to Get Major Tax Relief in India

Imported Electric Cars are about to become far more accessible to Indian consumers and automakers, thanks to a bold move by the Government of India. In a major push to promote India as a global electric vehicle (EV) manufacturing hub, the Ministry of Heavy Industries (MHI) has finalized a groundbreaking scheme named Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).

This scheme dramatically lowers import duty for select imported electric cars from up to 110% to only 15%, but only under strict conditions. With this initiative, the government aims to drive domestic manufacturing, technology localization, and long-term investment in India’s EV sector.

🔧 Key Highlights of the SPMEPCI Scheme

✅ Reduced Customs Duty on Imported Electric Cars

Under SPMEPCI, approved applicants can import a specific number of imported electric cars through the Completely Built-Up (CBU) route by paying only 15% customs duty, instead of the standard 70%–110%.

✅ Investment Requirements for Automakers

To be eligible, automakers must:

Have global group-level revenue of at least ₹10,000 crore.
Hold fixed asset investments worth ₹3,000 crore globally.
Pay a non-refundable ₹5 lakh application fee.

Imported Electric Cars
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Once approved, companies must:

Invest at least ₹4,150 crore in India within 3 years.
Achieve 25% Domestic Value Addition (DVA) within 3 years, and 50% within 5 years.
Generate ₹5,000 crore revenue in the 4th year and ₹7,500 crore in the 5th year.

Failure to meet these goals may result in up to 3% penalties on the shortfall.

🏭 What Investments Will Count?

To meet the ₹4,150 crore requirement, both greenfield and brownfield projects will be allowed. The following are included:

New plants, machinery, equipment, and utilities.
Engineering R&D centers.
Charging infrastructure (up to 5% of investment).
Factory buildings (up to 10% of investment).

Land cost is not included in the investment calculation.

🚙 Limit on Imported Electric Cars

Approved automakers will be allowed to import up to 8,000 imported electric cars at 15% tax, but only if:

The CIF (Cost, Insurance, Freight) value is at least $35,000.
The total duty waived doesn’t exceed the committed investment or ₹6,484 crore, whichever is lower.

This cap ensures that the incentive promotes investment without excessive revenue loss.

🏢 Global Automakers Show Interest

Though Tesla has not yet confirmed manufacturing plans in India, other major international brands have shown strong interest in participating in this scheme:

Mercedes-Benz
Volkswagen
Hyundai
Kia
Skoda

These automakers are expected to leverage this policy to bring their premium imported electric cars to Indian consumers while simultaneously setting up manufacturing and R&D operations in India.

📈 Why This Move Matters

This new policy will help India:

Attract large-scale foreign direct investment (FDI) in EV manufacturing.
Boost localization and job creation in the EV ecosystem.
Make imported electric cars more affordable and accessible to Indian consumers.
Enhance EV adoption, in line with India’s climate and sustainability goals.

The reduction in tax will encourage buyers to opt for global EV brands, which until now were priced out of reach.

🔚 Final Words: Imported Electric Cars & India’s EV Future

With this visionary policy, the Indian government is strategically building its electric mobility ecosystem by welcoming imported electric cars while demanding a strong commitment to local manufacturing.

The combination of tax cuts, manufacturing mandates, and performance metrics makes this a win-win for the government, automakers, and consumers alike.

If executed effectively, this scheme can place India on the global EV manufacturing map, making it a hub not just for exports but for cutting-edge innovation and clean energy transportation.