In recent talks with stakeholders, the ministry proposed lowering the number of components covered under the Phased Manufacturing Programme (PMP) in FAME-III from 18 to 12.
The Ministry of Heavy Industries is engaging stakeholders in a phased manufacturing programme (PMP) discussion that imposes tougher localization requirements on electric vehicle (EV) manufacturers to be eligible for the proposed Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-III) subsidy. In these discussions, the ministry has proposed reducing the PMP list in FAME-III from 18 components to 12, including the removal of items like power and control wiring harnesses, connectors, miniature circuit breakers, electric safety devices, lighting, and body panels, which will now need to be produced domestically.
Furthermore, the ministry has emphasized that all other EV parts, components, and sub-assemblies must also be domestically manufactured and assembled. It has requested feedback from automotive companies on these proposed modifications.
Specific guidelines for localizing PMP components have been detailed. For example, in electric two-wheelers, three-wheelers, and electric rickshaws, only the cell and related thermal and battery management systems may be imported. Battery modules or complete battery packs in completely knocked down (CKD) form are not allowed; all other necessary parts for assembling the battery pack must be sourced domestically. For onboard chargers and vehicle control units, only semiconductor devices and electronic components are permitted for import, while all other parts, including PCB manufacturing, must be locally sourced.
Only permanent magnets, Hall Effect sensor kits, and encoders can be imported for traction motors, another critical EV component. All other components must be procured domestically.
The ministry has clarified that local suppliers importing finished parts and direct imports from abroad will not qualify for the PMP and FAME-III benefits. Eligibility for PMP and FAME-III will include local sourcing of raw materials and parts, local assembly of finished products, and a combination of partial imports with local sourcing of materials and parts followed by local assembly.
However, EV manufacturers are voicing concerns, particularly about the compulsory domestic manufacturing of PCBs under PMP, highlighting the limited domestic capacity for PCB production. This issue is compounded by recent duty reductions on imported PCBs in the Union Budget, contrasting with allowances for mobile device manufacturers to import PCBs, which they argue should similarly apply to EV makers.
New regulations are anticipated to foster a surge in local EV production with specific mandates:
- Reduction of EV components under PMP from 18 to 12.
- Requirement for domestic manufacturing of all components, including those no longer listed under PMP.
- Ban on importing battery packs and modules in CKD format while allowing the import of battery cells.
- Restriction of imports for vehicle control units and onboard chargers to only semiconductor devices and electronics.
- Objections from EV companies regarding the mandatory PCB manufacturing due to the scant domestic supply will be addressed in discussions with the Ministry of Heavy Industries.
- Inclusion of four specific components under PMP for four-wheelers and e-buses: electric compressor for HVAC and brakes, AC charging inlet, and DC charging inlet.
