TL;DR
India's EV manufacturing scheme is stalled, awaiting clarity on the India-EU Free Trade Agreement, as automakers cite concerns over investment and local content rules.
The Indian government's scheme to promote electric passenger car manufacturing (SPMEPC) has not gained anticipated momentum, as global automakers are hesitant to commit investments without clear terms from the India-EU Free Trade Agreement (FTA). Minister of State for Heavy Industries, Bhupathiraju Srinivasa Varma, informed Parliament on December 2, 2025, that several companies indicated their decision to participate hinges on the finalization of the trade deal.
Despite an earlier deadline of October 21, no automakers submitted applications for the scheme. Concerns raised by firms include the uncertainty surrounding the FTA, restrictions on rare-earth magnets affecting Domestic Value Addition (DVA) requirements, and difficulties in meeting the mandated investment levels and timelines. The Heavy Industries Ministry clarified that it is not currently considering reopening the application window or modifying the scheme's conditions, emphasizing that the industry's participation is largely tied to the outcome of the India-EU negotiations.
