Government to Cap Investment in Charging Networks Under New EV Policy

Nitin Konde, Varun Bhardwaj

24 Feb 2025 — 3 min read

Govt to Limit Investment in Charging Networks Under New EV Policy

According to reports, the Center's soon-to-be-notified electric vehicle (EV) policy will require foreign automakers to allocate just 5% of their overall foreign investment in the nation to the development of charging infrastructure. The measure is intended to guarantee that EV manufacturers invest more in vehicle manufacturing rather than charging infrastructure, according to draft regulations obtained by Reuters.

Therefore, the extra money spent by foreign automakers will not be considered an investment in the nation if they spend more than the 5% criterion. According to the 47-page draft paper dated January 2025, expenditures made on charging infrastructure will be taken into account up to (a) 5% of the promised investment. For those who are unaware, the government essentially gave international EV giants like Tesla a free pass when it introduced the EV policy last year. Under the new proposed regulations, global automakers who invest at least $500 million (INR 4,150 crore) in the construction of an Indian unit can import EVs with import charges of only 15% to 20%, as opposed to the existing 110%.

What New Rules State?

According to recent media reports, EV manufacturers cannot get around the anticipated EV regulations by only investing in charging infrastructure. In order to increase manufacturing in the nation, they will need to invest more money in manufacturing. The call is being taken because the government wants businesses to focus on production rather than just charging networks, according to a media report.

However, the Centre is now discussing the draft guidelines with EV manufacturers and other interested parties. The guidelines should be finalised by the end of next month. In order to qualify for reduced import charges on up to 8,000 electric vehicles annually, the new regulations also require EV manufacturers to generate a minimum turnover of $577 million by the end of their fourth year of business, according to the report. Businesses must reach the $866 million minimum barrier by the fifth year of existence. A penalty of 1% to 3% of the income deficit would be imposed on original equipment manufacturers (OEMs) that do not exceed the turnover requirement, according to the proposed regulations.

Tesla is all Set to Explore Indian Market

This coincides with preparations to re-enter India being initiated by Elon Musk's Tesla. According to reports earlier this week, the US-based EV company has decided on two showroom locations in Mumbai and Delhi NCR. The EV manufacturer is also seeking to hire skilled workers to strengthen its attempt to re-enter India.

In the upcoming months, the business is reportedly getting ready to sell a few thousand electric vehicles to India. According to rumours, the corporation is negotiating the establishment of a plant in states like Tamil Nadu, Maharashtra, and Gujarat. To entice the corporation to the state, the Andhra Pradesh government has also provided incentives including "ready" land tracts. In addition to Tesla, other international automakers including Hyundai and Toyota Motor are considering plans to produce EVs in the nation at both their new and current factories.