Skoda-Volkswagen, Mercedes Benz to make EVs in India; Tesla not interested

Skoda-Volkswagen and Mercedes Benz will announce investment plans to manufacture electric vehicles in India, said govt sources. The Ministry of Heavy Industries (MHI) will give sops under the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), they said.

The formal announcement is expected shortly, said sources.

Meanwhile, Union Heavy Industries Minister HD Kumaraswamy had said on Monday that Mercedes Benz, Skoda-Volkswagen, Hyundai and Kia have shown interest in manufacturing electric cars in India under the SPMEPCI. He added that Tesla was not interested.

"Tesla, we are not actually expecting interest from them...They are not interested in manufacturing in India," Kumaraswamy said.

The scheme was notified on March 15 but the guidelines were issued on Monday.

The window to apply under the scheme will open in a couple of weeks, officials said. To encourage global manufacturers to invest, approved applicants will be allowed to import Completely Built-up Units (CBUs) of electric four-wheelers with a minimum CIF value of $35,000 at a reduced customs duty of 15 per cent for five years from the date of application approval.

Applicants must make a minimum investment of Rs 4,150 crore as per the scheme's provisions.

The application window, through the Notice Inviting Applications, will remain open for 120 days or more. The Ministry of Heavy Industries reserves the right to open the application window as needed until March 15, 2026.

Domestic players like Tata Motors and Mahindra & Mahindra have invested millions of dollars in local EV manufacturing, with more to come, and lobbied against duty cuts. India's EV sales, dominated by Tata Motors, accounted for just 2.5 per cent of total car sales of 4.3 million in 2024. The government wants to increase this to 30 per cent by 2030.