Companies had conveyed they may decide on joining SPMEPCI after the India-EU FTA is finalised.New Delhi: India could revamp its incentive scheme for electric passenger car manufacturing since the proposed free trade agreement (FTA) with the European Union (EU) is expected to offer tariff cuts on fully built or semi-knocked-down electric vehicles, said people familiar with the matter.
Officials are evaluating changes to the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), which relies primarily on import duty concessions, including the introduction of more direct incentives, to entice global premium EV makers to establish manufacturing bases in the country, the people said.
“SPMEPCI will need to change after the India-EU FTA,” a senior official told ET, adding that the government has yet to get any application under this scheme.
Global automakers have listed the ongoing India-EU FTA negotiations, and China’s curbs on rare earth magnet exports among reasons for not participating in SPMEPCI, minister of state for heavy industries, Bhupathiraju Srinivasa Varma informed the Lok Sabha last month.
India and the EU are continuing negotiations for the FTA.
Companies had conveyed they may decide on joining SPMEPCI after the India-EU FTA is finalised. Sector watchers emphasised that making an investment commitment under this scheme solely due to the concessional duty sops won’t be feasible since a possible FTA could offer this incentive without the capital expenditure mandate.
In addition, automakers noted that the investment threshold requirements and timelines may pose a challenge, Varma said at the time.
The Centre approved SPMEPCI in March 2024 and subsequently held multiple rounds of deliberations with potential participants. Scheme guidelines were approved in June 2025 following which the invitation of applications window was opened till last October, but there were no responses.
This was despite the Centre writing to embassies of countries which have established automotive industries, encouraging them to participate in the scheme. Invitations were extended to Vietnam, Germany, Czech Republic, UK, and the US, officials had said.
SPMEPCI offered importing completely built-up units (CBUs) of electric four-wheelers with a minimum import value of $35,000 at reduced customs duty of 15 per cent for five years.
