India has officially launched the EV Policy 2025. Further, aiming to position the country as a global hub for electric car manufacturing. The policy, announced via a Gazette notification on June 2, 2025, outlines the operational framework of the SPMEPCI Policy in India.
The EV Policy 2025 offers reduced import duties, investment-linked incentives, and strict production targets. Further, aiming to attract global EV players and strengthen India’s domestic capabilities.
What is the EV Policy 2025?
The EV Policy 2025 allows approved manufacturers to import a limited number of electric cars at reduced customs duty rates—as low as 15%, down from the current 70% or higher. In return, companies must invest a minimum of ₹4,150 crore and set up manufacturing in India within three years.
Key Highlights of the EV Policy 2025
- Minimum investment: ₹4,150 crore
- Maximum duty benefit: ₹6,484 crore
- Deadline to start production: Within 3 years
- Import cap: Based on committed investment and CIF value of EVs
- Revenue goals: ₹5,000 crore in the fourth year and ₹7,500 crore in the fifth year.
- Charging infra support: Up to 5% of investment
- Eligible vehicles: M1-category battery-operated electric passenger cars
The policy supports the Make in India initiative, speeds up electric vehicle adoption, and encourages local value addition along with investments in research and development.
Reduced Import Duty: A Game-Changer for EV Brands
One of the most impactful changes introduced in the EV Policy 2025 is the reduction of customs duty on imported electric cars from the earlier rate of 70% to 100% down to just 15%. This considerable cut in import duty is available only to approved manufacturers who commit a minimum investment of ₹4,150 crore and agree to set up local manufacturing within three years.
This change holds massive financial implications for global automakers. Under the previous structure, importing electric cars into India made them prohibitively expensive due to high duties. Now, with the duty slashed to 15%, the cost per vehicle is expected to drop by as much as ₹17 lakh, allowing premium electric vehicles to be sold at far more competitive prices in India.
The policy opens a strategic entry point for international brands like Tesla, BYD, and other premium EV makers. They can now explore the Indian market through controlled imports while simultaneously planning their local manufacturing operations. This model significantly reduces upfront risk while aligning with the government’s Make in India vision.
However, the benefit is tightly linked to investment and production commitments. The number of vehicles that can be imported at the reduced duty is capped and proportionate to the CIF (Cost, Insurance & Freight) value of each vehicle and the total investment declared by the applicant. This ensures that only serious manufacturers with long-term localization plans reap the rewards, promoting genuine investment rather than opportunistic imports.
In effect, the EV Policy 2025 transforms customs duty from a barrier to a performance-linked incentive. Further, making India not only a lucrative consumer market but also a high-potential manufacturing base for electric mobility.
How the SPMEPCI Policy Functions Under the 2025 EV Policy
The SPMEPCI Policy, which sits under the umbrella of the EV Policy 2025, ensures accountability from applicants by enforcing strict compliance norms. For instance, only public fast-charging stations are eligible for capital support under the scheme. Additionally, all R&D investment must be in-house, and outsourcing of key development work is not permitted. Applicants must also adhere to FDI rules and local sourcing guidelines.
Duty savings are directly linked to the applicant’s declared investment and the CIF value of imported vehicles, ensuring clear limits on how much benefit can be claimed. This links immediate incentives to sustained value generation within the country.
Who Can Apply Under EV Policy 2025?
To be eligible, companies must not appear on RBI, SEBI, or NCLT defaulter lists. A valid bank guarantee from an Indian scheduled commercial bank is mandatory. Additionally, the company must commit to setting up in-country EV manufacturing infrastructure and demonstrate a clean record with financial regulators. A non-refundable fee of ₹5 lakh is mandatory for the application.
EV Policy 2025 vs PLI Scheme
While the PLI Auto Scheme focuses on incentivizing component and part manufacturing. The EV Policy 2025 aims to establish complete electric vehicle manufacturing facilities. It creates a phased path—from CBU imports to CKD assembly and full localization. Further, encouraging a deeper manufacturing footprint in India over time.
Long-Term Impact of EV Policy 2025
With an expectation of transformative long-term outcomes of the policy. It will not only help increase premium EV penetration in India, but create thousands of jobs, attract foreign direct investment, and contribute to India’s clean energy and climate goals. By linking benefits to actual investment and production, the policy avoids misuse and encourages genuine players to establish local operations.
Conclusion
The EV Policy 2025 signals a major shift in India’s electric mobility ambitions. By linking duty concessions to real investment and local production, the government is sending a clear message—India is open for EV business, but on its own terms. The drastic cut in import duty not only lowers costs but also gives global manufacturers a powerful incentive to build in India. With the right mix of incentives and accountability, this policy could make India a global epicenter for electric vehicle innovation and manufacturing.
