“During the recent stakeholder consultations, original equipment manufacturers (OEMs) have indicated that they may take a decision regarding participation in the scheme after the finalization of the India-EU FTA,” Minister of State for Heavy Industries Bhupathiraju Srinivasa Varma told the Lok Sabha in a written response to questions.
A concessional import duty was the only incentive offered to automakers under this program. Industry observers say an investment commitment on this basis would not be feasible since a possible India-EU FTA could enable this without a capital expenditure mandate. In addition to these issues, automakers said investment threshold requirements and timelines could pose a challenge, Varma added. According to the MoS, automakers are concerned that restrictions on rare earth magnets could affect the achievement of national value added (DVA) targets set out in the SPMEPC.
India announced the establishment of SMEC on March 15, 2024 to encourage investment in the local manufacturing of high-end electric cars. The scheme allowed the import of fully assembled electric cars with a minimum cost, insurance and freight value of $35,000 with import duty of 15 per cent for a period of five years if companies make a minimum investment of $500 million (over Rs 4,300 crore) to start local manufacturing.
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