India will give about $3.5 billion, or ₹25,756 crore, in incentives to auto companies over a five-year period under a revised plan to boost manufacturing and exports of clean technology vehicles, two sources aware of the latest proposal told Reuters. The government’s original plan was to provide around $8 billion or ₹58,861 crore to automakers and part makers, primarily to promote petrol technology, with the added benefits of electric vehicles (EVs). The plan was revamped to focus on companies manufacturing electric and hydrogen fueled vehicles, Reuters reported on Friday, with Tesla Inc set to enter India.
It was not immediately clear why the allocation was revised, but one of the sources said that since the focus had shifted to clean and advanced technology, fewer companies would be eligible for the incentive. India sees clean auto technology as central to its strategy to reduce its oil dependence and debilitating pollution in its major cities, while also meeting its emissions commitment under the Paris climate agreement. Domestic automaker Tata Motors is the largest seller of electric cars in India, with rival Mahindra & Mahindra and motor-bike companies TVS Motor and Hero MotoCorp firming up their EV plans.
The plan was reworked to focus on companies manufacturing electric and hydrogen fueled vehicles.
India’s largest carmaker Maruti Suzuki has no near-term plans to launch an EV as it does not see volume or affordability for consumers, its chairman said last month. A government official with direct knowledge of the matter said the initial allocation has been reduced over a five-year period, but if the plan is successful, the initial funds are spent, and certain conditions are met.
The official did not specify those terms, and India’s industry and finance ministries did not immediately respond to an email seeking comment. The details of the plan, part of India’s wider $27 billion (₹19,86,47 crore) program to attract global manufacturers, could be made public as early as next week, two sources said.
If the plan is successful, the initial funds are spent, and certain conditions are met, the original incentive amount may be made available.
A source said that under the revised scheme, qualifying companies will get cashback payments equivalent to around 10%-20% of their turnover for EVs and hydrogen fuel cell cars. The carmaker would need to invest at least $272 million (over ₹2000 crore) over five years to qualify for the payment.
Auto parts manufacturers will be encouraged to make parts for clean cars and invest in safety-related parts and other advanced technologies such as sensors and radars used in connected vehicles.
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