With a 15% import duty window and local investment requirement, India’s EV sector sets the stage for new global players to enter.
The Indian government’s new policy initiative, the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), is expected to facilitate the entry of new foreign automakers into the country’s electric vehicle (EV) segment, according to Santosh Iyer, CEO and Managing Director of Mercedes-Benz India.
Under the scheme, companies will be allowed to import up to 8,000 EVs annually with a reduced import duty of 15%, compared to the prevailing rate of 70–100%.
In exchange, automakers must invest a minimum of ₹41.5 billion in establishing local EV manufacturing operations within a defined period. Introduced by the Ministry of Heavy Industries, the policy is part of a broader push to scale up domestic EV production and attract new foreign direct investment into the sector.
Commenting on the development, Iyer described the scheme as a forward-looking initiative by the government. He made these remarks following the launch of two performance models, ‘AMG GT 63 4MATIC+’ and ‘GT 63 PRO 4MATIC+ Coupé’ priced at ₹30 million and ₹36.5 million, respectively (ex-showroom, India).
However, he clarified that the scheme primarily benefits new entrants to the market rather than established players like Mercedes-Benz.
Providing context, Iyer noted that Mercedes-Benz has been present in India for over three decades and has already invested ₹30 billion in its Chakan plant near Pune.
Currently, the company assembles two EV models locally, a move that predates the announcement of the scheme.
He further stated, “For us, it’s business as usual,” implying that the brand’s existing operations are already in line with the goals the scheme aims to achieve for newcomers.
Looking ahead, Iyer offered a cautiously optimistic outlook on the EV market. While he noted that demand for electric vehicles remains steady, he projected that 2025 may see only modest growth, reflecting a possible period of consolidation following recent rapid expansion.
Turning to supply chain concerns, Iyer addressed questions about the availability of rare earth materials that are essential components in EV production and are subject to global volatility.
Despite ongoing geopolitical tensions and supply-related challenges in other regions, he said Mercedes-Benz has not experienced any disruptions in its Indian operations. “Our back-end teams have managed the situation effectively,” he added.
In addition to EV developments, the recent launch of the two AMG models signals the company’s continued commitment to India’s performance vehicle segment.
According to Iyer, these cars are designed for a niche but growing group of customers who value high-performance engineering and precision. “They represent continuity in our product strategy,” he stated to PTI.
More broadly, the SPMEPCI scheme adds to a series of government initiatives intended to bolster the country’s EV landscape.
While firms like Mercedes-Benz may not directly benefit from the current provisions, the policy is likely to reshape market dynamics by encouraging the entry of new, EV-focused manufacturers, further intensifying competition in the segment.
