India EV Manufacturing Incentive SPMEPCI Faces India–EU FTA Pressure

India EV Manufacturing Incentive SPMEPCI has come under review as the government weighs possible changes to the electric passenger car manufacturing program while negotiating a free trade agreement with the European Union. The proposed trade deal could reduce EV import duties, potentially weakening the appeal of India’s current incentive framework for global automakers.
According to industry reports, if the India–EU agreement allows electric vehicles to enter the country at lower tariffs without requiring companies to invest locally, it may undercut the main attraction of the India EV Manufacturing Incentive SPMEPCI. This scheme is designed to push companies toward domestic manufacturing rather than pure imports.
Why India EV Manufacturing Incentive SPMEPCI Is Being Reconsidered
The Scheme to Promote Manufacturing of Electric Passenger Cars in India, approved in March 2024, has so far failed to attract a single application. Automakers have raised multiple concerns that have slowed participation and reduced confidence in the policy framework.
Key issues highlighted by companies include:

• Uncertainty over the final terms of the India–EU free trade agreement

• Export restrictions on rare earth magnets from China, which are vital for EV motors

• High minimum investment requirements

• Tight timelines for setting up local manufacturing facilities

Government officials have indicated that once the trade agreement is finalized, duty benefits alone may not be enough to encourage large-scale investments. If import concessions are offered through the FTA without production obligations, manufacturers may see little value in joining the scheme.
What the India EV Manufacturing Incentive SPMEPCI Offers
The India EV Manufacturing Incentive SPMEPCI is built to attract global electric car makers by offering lower customs duties in exchange for local investment. Companies approved under the scheme can import electric passenger vehicles at a reduced duty rate for a fixed period while establishing production in India.
This structure is meant to balance short-term market entry with long-term industrial development, ensuring that India does not become just an import market but also a manufacturing base for advanced electric mobility.
Strategic Goals Behind the India EV Manufacturing Incentive SPMEPCI
The government’s broader aim is to position India as a global hub for electric vehicle production. Through this policy, authorities expect to strengthen domestic supply chains, generate skilled employment, and accelerate the adoption of cutting-edge automotive technologies.
The scheme also supports national priorities such as clean transportation, the transition toward low-carbon mobility, the target of achieving Net Zero emissions by 2070, and the long-term Make in India manufacturing agenda.
How the India EV Manufacturing Incentive SPMEPCI Works
Under the policy, approved applicants are allowed to import fully built electric four-wheelers with a minimum declared value of 35,000 US dollars. These vehicles attract a concessional customs duty of 15 percent for up to five years from the date of approval.
In exchange, participating companies must commit to investing at least 4,150 crore rupees to establish electric vehicle manufacturing operations in India within a defined timeframe. This investment requirement is intended to ensure that tariff benefits translate into real production capacity.
What Could Change Going Forward
Many automakers are waiting for clarity on the India–EU trade agreement before making any commitments. Industry specialists expect that once trade terms are known, the government may adjust the India EV Manufacturing Incentive SPMEPCI to add more direct financial or operational incentives beyond reduced import duties.
Such revisions could make the scheme more competitive and provide stronger motivation for global EV players to choose India as a long-term manufacturing base rather than only a sales destination.