The ministry of heavy industries (MHI) is set to revise localization rules under the Centre’s latest electric vehicle (EV) subsidy scheme, a key requirement for original equipment manufacturers (OEMs) to qualify for incentives.

At an event in the national capital on Wednesday, MHI secretary Kamran Rizvi highlighted that the phased manufacturing programme under the newly-launched PM E-Drive scheme will be “tweaked and amended to align with the growth of the Indian industry.”

The recently announced PM E-Drive scheme succeeds the Faster Adoption and Manufacturing of Electric (and Hybrid) Vehicles (FAME) initiative, and has a total outlay of ₹10,900 crore.

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The phased manufacturing programme, carried over from previous EV subsidy schemes, outlines components that the government encourages OEMs to produce domestically, as well as those that may be imported. The programme also gradually phases out certain imports, promoting domestic manufacturing.

In addition to accelerating EV adoption and contributing to India’s goal of achieving net-zero emissions by 2070, a core objective of the Centre’s EV subsidy schemes is to boost localization and strengthen domestic industry growth, Rizvi noted.

Under previous subsidy programmes, up to 18 components were eligible for import, but their imports were to be phased out as the Indian industry scaled up. Components not listed in the phased manufacturing programme had to be produced locally.

For example, while battery packs were included among products whose imports would be phased out, India does not yet produce battery cells, a crucial part of these packs. As a result, battery cells were permitted to be imported, with no set deadline for ending imports. However, the final assembly of battery packs had to take place in India, as per earlier notifications.

Consultations with the industry are currently underway, and the revised phased manufacturing programme for the PM E-Drive scheme will be announced soon, a senior government official said on the sidelines of the event. The official added that the new localisation rules will be stricter, reflecting the growth in domestic manufacturing capacity.

The PM E-Drive scheme is expected to be officially notified within a week or two, according to the official.

Mint had previously reported that the government is expected to tighten localization rules, and that the Automotive Research Association of India, the research arm of the heavy industries ministry, is conducting industry consultations.

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Minister of heavy industries HD Kumaraswamy, also present at the event, remarked that past EV subsidy schemes had made a positive impact on promoting sustainable mobility. 

He noted that EV adoption had grown significantly in recent years, with the FAME scheme pushing adoption rates to “5-7% in the two-wheeler, three-wheeler, and electric bus segments, which are the transportation systems for the masses.”