The Ministry of Heavy Industries announced its plan to encourage the production of electric passenger cars in India last year. This plan has now been completed and launched as the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). Let's examine a few of this scheme's main highlights.[Mercedes-Benz G 580 Edition One]Import duty concession only through investmentCar manufacturers will see a reduced import duty from 110% to 15%, as per the scheme. The concession in locked behind a commitment to manufacture EVs in India. A mandated investment of USD 500 million (approx ₹4,150 crores ) will be required, which has to be made within three years. There are no restrictions on using existing facilities.However, this investment cannot include any investments made earlier. Once these conditions are met, the import duty is reduced for five years . Participants in India’s new EV scheme will also need to achieve annual turnover milestones. For example, turnover should be ₹2,500 crore by the second year, ₹5,000 crore by the fourth and ₹7,500 crore by the fifth.Manufacturers will also need to increase localization in a progressive manner. Local value addition via local manufacturing should be 25% by the third year and 50% by the end of the fifth year .[BMW i7]To protect the interests of domestic EV manufacturers, the reduced import duty rate of 15% will apply only to electric vehicles priced above USD 35,000 (approximately ₹30 lakh). This threshold aims to prevent market disruption and protect mainstream EV offerings in India from practices like dumping. The segment safeguarded under this policy includes models such as the Mahindra XUV 9e, BE 6, Tata Harrier EV, Punch EV, Nexon EV, Curvv EV, MG Windsor, Hyundai Creta Electric, and upcoming models like the Maruti e-Vitara and Sierra EV.Additionally, a cap has been set: only 8,000 EVs per year can benefit from this reduced duty. Any imports beyond that will attract the regular 110% duty. The SPMPCI framework also states that total import duty benefits cannot exceed ₹6,484 crore or the actual investment made by the manufacturer—whichever is lower. If any portion of the annual quota is unused, it can be carried forward to the following year.The policy outlines what qualifies as initial investment: expenses on R&D facilities, machinery, and manufacturing equipment. For charging infrastructure, up to 5% of the total investment can be counted, while up to 10% of the cost of land and buildings used for core manufacturing operations will be considered.To be eligible, companies must have an annual revenue of at least ₹10,000 crore directly tied to automobile manufacturing, along with a global investment in assets of at least ₹3,000 crore.[Tesla Model X]Will Tesla start manufacturing in India?Expectedly, the government will soon launch an online portal to facilitate participation in the SPMPCI scheme. Eligible manufacturers will be able to apply for the scheme and get approvals faster.Tesla can benefit from this scheme but currently, the company does not seem interested in manufacturing locally, given the political stance of Trump administration. In that case, Tesla will settle for the 110% tariff on its cars to sell them in India.On the other hand, manufacturers like Skoda, Volkswagen, Mercedes-Benz, Hyundai and Kia have expressed interest in benefitting from the SPMPCI scheme.