From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Features of the policy and concerns by private players
Why in the News?
The Union government approved a policy to promote India as a manufacturing hub for Electric Vehicles (EVs).
Features of the Electric Vehicles policy:
- Reduction of Import Duty: Import duty on electric vehicles (EVs) imported as Completely Built Units (CBUs) with a minimum CIF value of $35,000 is reduced from 70%-100% to 15% for five years.
- Waiver of Duty: A maximum of 40,000 EV imports in five years, with a duty waiver of ₹6,484 crore or proportional to investment (whichever is lower), requires a minimum $800 million investment.
- Localization Targets: Manufacturers are required to set up manufacturing facilities in India within three years. They must achieve 25% localization by the third year and 50% localization by the fifth year of incentivized operation.
- Incentives for Setting Up Manufacturing Facilities: The policy incentivizes manufacturers to establish manufacturing facilities in India by offering reduced import duties and waivers, provided they meet certain investment and localization targets.
- Encouragement of Global EV Makers: The policy aims to encourage global EV makers like Tesla and Chinese EV maker BYD to enter the Indian market by providing favorable conditions for setting up manufacturing facilities and importing EVs.
Present concerns raised by Private Players in the Market:
- Impact on Domestic Industry: Tata Motors opposed the reduction of import duties, fearing it would negatively affect the domestic industry. They argued that lowering duties could harm the investment climate.
- Competitive Disadvantage: Domestic players are concerned that the policy benefits mainly higher-end Original Equipment Manufacturers (OEMs), potentially placing them at a competitive disadvantage in segments below ₹29 lakh.
- Favoring Global Players: The policy appears to favor global EV players and Indian joint ventures with such players, potentially making it more challenging for purely domestic players to compete effectively.
Conclusion: The government should engage in dialogue with stakeholders, including domestic players like Tata Motors, to address their concerns and seek their input in shaping the policy framework. Need to implement measures to support domestic players, including providing incentives and support for technology development, innovation, and capacity building.
Mains question for practice
Q Indian Government has recently approved a policy aimed at promoting the country as a manufacturing hub for Electric Vehicles (EVs). Discuss the key features of this policy. Highlight the concerns raised by private players.
Mains PYQ
Q How is efficient and affordable urban mass transport key to the rapid economic development in India? (UPSC IAS/2019)
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