India’s new electric-vehicle manufacturing initiative, known as the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), got no proposals before the October 21 deadline. The initiative aims to draw in global EV manufacturers by offering them:
- A lower import taxes on a limited number of fully assembled electric vehicles
- Setting out clear localisation pathways
However, the lack of participation is rasing concerns and anxiety among both industry experts and the policymakers.
Why automakers stayed away
According to industry sources, many global automakers were hesitant to apply due to concerns over the ongoing India-EU Free Trade Agreement (FTA). Companies have concerns that changes in tariffs or trade restrictions under the FTA may disrupt long-term plans, making substantial investments more difficult in the near term.
Another key concern is the ban on rare-earth magnets, a most vital part for the EV motors. These magnets are largely imported, and the limits have left manufacturers concerned about their ability to meet the scheme’s stringent Domestic Value Addition (DVA) requirements.
According to SPMEPCI, enterprises have to start local manufacturing within 3 years and eventually attain 25% DVA in the first 3 years and 50% within 5 years, which many believe are difficult to achieve without a secure supply chain.
A setback for India’s EV push
The government had held extensive conversations with automakers and expected strong participation, particularly after the program was pitched as an opportunity similar to what drew Tesla, VinFast, and other global firms to international markets. However, the lack of even a single application suggests that the industry is still waiting for clearer trade standards, more realistic localization deadlines, and policy stability before making large-scale commitments.
The situation shows how bigger geopolitical factors, ranging from rare-earth supply risks to international trade concepts, are directly influencing India’s goals to become a major EV manufacturing hub under the “Make in India” program.
What Happens Next?
With no applications till date, industry experts believe that the government needs to change a few pieces of the scheme like:
- Lowering the DVA targets
- Extending timelines
- Adjusting the investment level
As these elements will make the scheme more viable. Officials are also going wait for more details on the India-EU FTA before reopening or changing the scheme.
For the time being, the lack of participation gives a heads up, that regulatory stability and consistent access to vital parts will definitely be the key elements to expand the EV growth in India.
