Firmer push for local EV production in FAME-III

Govt is considering introducing a 50% domestic value addition mandate

- Rituraj Baruah & Subhash Narayan

The government is considering implementing stricter norms to enforce the use of local components to bolster domestic manufacturing of electric vehicles (EVS), amid instances of companies violating phased manufacturing programme (PMP) norms by assembling vehicles with imported parts.

The Union ministry of heavy industries (MHI) is considering introducing a 50% domestic value addition (DVA) requirement and doing away with PMP as part of its proposed Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) III, according to two people familiar with the development. DVA is calculated based on the net selling price of a product and the landed cost of imported inputs.

Further, the heavy industries ministry plans to introduce an annual review of compliance with indigenization norms. "One thing is, there would be an annual check of the applicants. There would be DVA. There was no DVA in FAME so far; there was PMP. In the next phase of FAME, when it comes up, we would have DVA," said a person aware of the matter.

Under PMP, the government offers a graded duty structure and a timeline for the graded implementation of the indigenization of components over time to discourage imports and boost demand for local products.