But an increase in total electric PV numbers in 2025 has still kept their share of the overall PV market at a minuscule 4 per cent.The government appears to be at its wits’ end about the ambitious scheme launched last year to make India a global hub for electric passenger cars. A senior official has now called this much-hyped scheme a “dead letter”, as not a single OEM has come forward to apply for import duty sops available under the Scheme for Promotion of Manufacturing of Electric Passenger Cars (SPMEPC) till date. And a portal set up to accept applications has long been closed.
“Nothing is happening, it is a dead letter. There is no movement,” this official told ETAuto. When asked whether the scheme was being scrapped, he said “this is a five-year scheme, there is still time,” without elaborating further.
The term “dead letter” refers to a law (scheme in this case) which has not been repealed but has become ineffectual or defunct in practice. The official did not respond to a question about whether the scheme would be scrapped, amended or replaced by another scheme with more generous sops for encouraging OEMs to build and export electric cars from India.
The apathy of OEMs to make electric passenger cars locally comes as the penetration of electric in the domestic passenger vehicle (PV) segment continues to struggle, reaching just about 4 per cent in 2025. At this rate, reaching the target of 30 per cent EV penetration by 2030, which the government had set itself earlier, may not be possible.
Domestic passenger car buyers remain concerned about several aspects of EVs, most importantly the patchy charging infrastructure and consequent range anxiety. OEMs, on the other hand, are apprehensive about imports of electric passenger cars at lower duty rates, making their products unviable.
The official quoted above said that despite several rounds of consultations to promote this scheme, OEMs remain unconvinced about investing thousands of crores in creating an EV manufacturing infrastructure since benefits remain unclear.
The cold vibes towards SPMEPC by car makers coincide with their increasing concerns about Chinese OEMs using various Free Trade Agreements (FTAs), which India has been signing with several countries, to route their vehicles to the domestic market.
Tesla stays away
Global electric car OEMs, including Tesla, have stayed away from committing any investments in India despite concessional import duty rates promised in SPMEPC. It is ironic that this scheme had been virtually tailor-made to suit Tesla’s demands earlier and lapsed late last year without a single application coming in.
In fact, as other global OEMs hemmed and hawed over whether to set up manufacturing operations for electric cars in India, Tesla quietly entered the market through the CBU (Completely Built Unit) route, setting up dealerships in big Indian cities.
The no-show by global OEMs till date comes despite senior government officials indicating earlier that Hyundai Motor India, Kia India, the Volkswagen Group and Toyota were interested.
Revival efforts wasted
The official quoted above had earlier said that the portal which had been opened to accept applications under this scheme has been closed but could be reopened after fresh industry consultations. He said a Tesla representative had attended one of the stakeholder consultations of SPMEPC earlier but there was no representation from the company in subsequent meetings.
“We were thinking of re-opening the portal after the suggestions come in from OEMs on any changes they want. But no fresh proposal has come in,” he said, adding that fundamental shifts in the scheme would have not been possible anyway. The scheme had been drafted after several high level inputs from within the government, involving many senior officials.
ICE cars plateauing?
In the words of Hanif Qureshi, Additional Secretary, Ministry of Heavy Industries, the ICE car market is like a massive ocean liner. It carries a vast amount of weight and dominates the sea but its speed fluctuates with the tide. The electric passenger vehicle market, on the other hand, is like a high-speed motorboat, currently much smaller than the ocean liner but accelerating so rapidly that it is quickly narrowing the gap in performance.
Qureshi has predicted that the ICE market may be plateauing “for the moment” and that the electric PV car market “is still in a phase of rapid upward expansion”. So will 2025 become the inflection point for India’s electric push in PVs?
Qureshi’s comments on electric PV sales came in a linkedIn post just as data from the Vahan portal showed nearly 86 per cent growth in sales of electric PVs in calendar 2025 versus 2024.
What’s more, sales of plug-in hybrid cars and strong hybrid cars have nearly doubled in these 12 months. As per Vahan, sales of electric PVs were over 2.7 lakh, compared to 1.26 lakh in calendar 2024.
There were multiple reasons for the electric PV market cheer in the year gone by. New model launches by multiple OEMs in 2025 targeted the popular SUV/MPV segments, providing options beyond hatchbacks. These new models fueled excitement and brought people to showrooms, raising sales of electrics despite gaps in the charging infrastructure and other teething issues.
But an increase in total electric PV numbers in 2025 has still kept their share of the overall PV market at a minuscule 4 per cent.
High investment, impossible localisation mandate
In several rounds of industry consultations about SPMEPC, OEMs raised many red flags. At least one OEM suggested that import duty sops be made available for setting up manufacturing operations for ICE cars, which the government rejected outright, saying this defeated the very purpose of the scheme, which is to promote manufacturing of green vehicles.
Another major industry concern was about the possible impact on import duties under the impending India-EU FTA. In case duties are significantly lowered under the FTA, the SPMEPC would become unattractive since it requires significant investments and lays down conditions on domestic value add (DVA) besides penalties for not meeting DVA criteria.
Then, OEMs have said that SPMEPC has impossible conditions: the investment made by an OEM in land – a sizable amount usually – has been excluded from the total investment mandated under this policy.
And penalties have been defined in case the strict DVA targets are not met. The high entry barrier – ₹10,000 crore global revenue from automotive business and global fixed assets worth ₹3,000 crore – anyway makes smaller EV OEMs ineligible.
Also, the import duty reduction was applicable only on high value CBUs, incentivising global OEMs to test market their high-end EV models in the Indian market.
SPMEPC requires a participating OEM to commit ₹4,150 crore ($500 million) minimum investment in setting up a manufacturing facility; the OEM must achieve 25 per cent DVA (domestic value add) within three years and 50 per cent within five years.
In lieu of a commitment to make electric passenger cars in India and reach local sourcing level of 50 per cent in five years, the OEM was to be allowed to import a specified number of high value cars (priced $35000 and above) from its global factories at a concessional duty rate of 15 per cent.
