The government is looking at considering research and development (R&D) investments, along with funding towards setting up dedicated assembly lines for electric vehicles in existing factories, for incentivising carmakers in the scheme announced to promote local manufacturing of high-end EVs last year.

The decisions were reached at a meeting held with industry stakeholders last week.

India announced a new policy - Scheme for Manufacturing Electric Cars (SMEC) - on March 15, 2024, to encourage investment in local manufacturing of high-end EVs.

As per sources in the know, at the latest and final round of discussions with industry stakeholders last week, the government agreed upon the scope of investments permitted to make it viable for those operating in India to viably channel resources to develop an ecosystem for EVs. A top source privy to the development said, "Investments in R&D, manufacturing of EVs in dedicated assembly lines in brownfield facilities have both been agreed upon." Companies are allowed to make investments of USD 500 million in a greenfield factory for manufacturing EVs from the date of approval under the scheme within the next three years to avail of concessional import duties under the scheme. The eligibility of investments under R&D mirror the qualifying criteria for auto production-linked incentive (PLI) scheme already in force.

While both Tesla and VinFast skipped the latest meeting between industry executives and authorities last week, nearly half-a-dozen players including Hyundai, Škoda-VW, Mercedes Benz India, Toyota have expressed interest in the scheme."Scheme guidelines will be released shortly," a senior official told ET.

Automakers interested in the scheme had raised concerns about the quantum of investment specified in EV-only facilities. To commit investments of ₹4,000 crore, one needs scale. "Investments being made in R&D would help build capability in advanced automotive technologies," a second person said.