In a strategic move aimed at fostering the growth of electric vehicle (EV) adoption, the Indian government has announced a significant reduction in duty on imported EVs. This pivotal decision has caught the attention of global automobile manufacturers eyeing the burgeoning Indian market. Among them is VinFast Auto, a prominent player hailing from Vietnam and led by Pham Nhat Vuong, the country’s wealthiest individual.
New E-Vehicle Policy
With its recent commitment to establishing a manufacturing facility in Tamil Nadu, VinFast is poised to capitalize on India’s evolving EV landscape. The company has now issued a statement expressing its keen interest in introducing premium electric SUVs to the Indian market, aligning with the nation’s latest EV policy reforms.
Pham Sanh Chau, CEO of VinFast India, commends the Indian government’s newly unveiled EV scheme for its potential to spur significant investments in manufacturing, skill development, and supply chain enhancement. Expressing VinFast’s steadfast commitment to India’s long-term growth, Chau announces a substantial investment of $500 million, earmarked for the establishment of an electric vehicle manufacturing facility in Tamil Nadu.
With a forward-looking approach, Chau highlights the policy’s transformative impact, paving the way for VinFast to introduce a diverse range of premium SUVs with eco-friendly features at competitive prices. Leveraging his extensive diplomatic background, Chau emphasizes VinFast’s dedication to driving sustainable mobility solutions in the Indian market.
In January 2024, VinFast inked a partnership with the Tamil Nadu government, vowing an investment of $500 million spanning five years. By February, construction commenced on their Thoothukudi-based EV manufacturing plant, geared to roll out 150,000 units yearly.
Expected Price
VinFast presently boasts a lineup of six battery electric SUVs, including the VF5, VF6, VF e34, VF7, VF8, and VF9, catering to price segments ranging from Rs 15 lakh to Rs 75 lakh in its domestic market. However, uncertainty looms over VinFast’s eligibility under the new policy, which requires manufacturers to have global annual revenues surpassing Rs 10,000 crore. With VinFast’s 2023 revenues falling just short of this threshold, its qualification remains uncertain.
The government’s latest e-vehicle policy entails a significant reduction in import duty, slashing it from 100 percent to a mere 15 percent for electric vehicles with a CIF value exceeding $35,000 (approximately Rs 29 lakh). This reduction is contingent upon manufacturers committing to invest a minimum of $500 million (about Rs 4,150 crore) in local manufacturing within a three-year timeframe. Additionally, manufacturers must achieve a domestic value addition (DVA) of 25 percent by the third year and at least 50 percent within five years.
Throughout this period, the government will allow the import of a maximum of 40,000 EVs at the reduced duty rate, translating to approximately 8,000 EVs annually. Moreover, manufacturers can carry over unused annual import quotas if their total investment surpasses $800 million (roughly Rs 6,629 crore).
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