Vietnam-based electric vehicle manufacturer VinFast has hit a regulatory hurdle as its $2 billion (₹16,000 crore) investment in Tamil Nadu does not qualify for benefits under India’s newly announced Scheme to Promote Manufacturing of Electric Passenger Cars.
Why VinFast’s Investment Is Ineligible
Government officials clarified that the scheme mandates investments must be capitalized after approval, meaning equipment and machinery must be put to use only after an applicant has been formally approved. Since VinFast already capitalized its investment, it will need to make a fresh investment of ₹4,150 crore to qualify.
VinFast’s Expansion Plans in India
Despite this setback, VinFast remains committed to India, with plans to:
- Launch VF6 and VF7 models ahead of the festival season.
- Scale up production to 1.5 lakh EVs annually, targeting exports to West Asia and Africa.
- Expand operations beyond Tamil Nadu, with discussions underway in Andhra Pradesh and Telangana.
India’s EV Policy & Future Outlook
The Scheme to Promote Manufacturing of Electric Passenger Cars, announced on March 15, 2024, aims to attract global automakers while ensuring significant fresh capital investment in local EV production.
Under the scheme, approved companies can:
- Import fully built electric four-wheelers (CBUs) priced above $35,000 at a 15% concessional customs duty for five years.
- Apply for incentives within a 120-day window, expected to open soon.
While VinFast is urging the Indian government to reconsider its prior investment, officials insist that only new investments post-approval will be eligible.
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