Government Pushes for Greater Local Content in Electric Vehicle Manufacturing with Revised FAME-III Guidelines

The Ministry of Heavy Industries is advancing its phased manufacturing programme (PMP) to bolster local content in electric vehicle (EV) production, integral to qualifying for the upcoming Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-III) subsidy scheme.

In recent discussions with industry stakeholders, the ministry proposed reducing the number of components under PMP from 18 to 12. Key components like power and control wiring harnesses, connectors, miniature circuit breakers, electric safety devices, lighting, and body panels, previously excluded, will now require domestic manufacturing. The ministry has emphasized that all other EV parts, components, and sub-assemblies must also be domestically produced and assembled. Automobile companies have been invited to provide feedback on these proposed changes.

For components included under PMP, a clear path for localisation is being discussed. In the case of electric two-wheelers, three-wheelers, and electric rickshaws, only the battery cells and associated thermal and battery management systems will be permitted for import. Battery modules or complete battery packs in completely knocked down (CKD) form will not be allowed, with all other parts required for battery pack assembly needing to be domestically sourced or manufactured.

For onboard chargers, imports will be restricted to semiconductor devices and electronics. All other components, including printed circuit board (PCB) manufacturing and soldering, must be domestically completed. Similarly, for vehicle control units and direct current (DC)-to-DC converters, only semiconductor devices and electronic components can be imported, while other parts, including PCB manufacturing, must be sourced locally.

In the case of traction motors, only permanent magnets, Hall Effect sensor kits, and the encoder can be imported, with all other components required to be procured domestically.

Additionally, the ministry has clarified that local suppliers importing finished parts and selling them to auto companies, as well as direct imports from foreign sources, will not qualify for PMP and FAME-III. Indigenous sources eligible for PMP and FAME-III have been defined as including local sourcing of raw materials and child parts, local assembly of finished products, and a combination of partial imports with partial local sourcing, followed by local assembly.

However, EV manufacturers have expressed concerns over the mandatory requirement for domestic PCB manufacturing, citing the limited domestic base for PCB production as a significant hurdle. They plan to discuss this issue with the Ministry of Heavy Industries.

The new rules also introduce four specific components under PMP for four-wheelers and electric buses: electric compressors for HVAC and brakes, AC charging inlets, and DC charging inlets.