VinFast’s $2 bn Tamil Nadu EV plant misses out on lucrative incentive scheme, must invest Rs 4,150 cr more to qualify

The USD 2 billion (Rs 16,000 crore) investment by Vietnam-based electric vehicle manufacturer VinFast in Tamil Nadu will not qualify for availing benefits under the Scheme to Promote Manufacturing of Electric Passenger Cars in India, officials said on Monday.

Officials explained that under the scheme, eligible investment must be capitalized in the books of account of the applicant "after the date of approval", therefore, equipment and machinery "must be put to use after becoming an approved applicant".

The window for applying under the scheme will be opened in a couple of weeks for 120 days or more.

VinFast, the electric vehicle (EV) unit of Vingroup, is setting up a USD 2-billion plant in Tamil Nadu's Thoothukudi, and is also in discussions with Andhra Pradesh and Telangana governments to expand its operations in India.

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The company is eyeing a launch in India with its VF7 and VF6 models before the festival season this year and aims to push up annual production in the country to 1,50,000 EVs in the coming years to be able to export them to countries in the Middle East and Africa.

"They (Vinfast) have already capitalised the investment so they will not qualify based on that investment for benefits under the scheme. They (Vinfast) will have to make a fresh investment of Rs 4,150 crore to qualify under the scheme. They are urging us to consider the investment already made, which we cannot accept," an official told PTI.

The guidelines under the scheme to Promote Manufacturing of Electric Passenger Cars in India were announced on Monday, whereby approved applicants will be allowed to import Completely Built-in Units (CBUs) of e-4W with a minimum CIF value of USD 35,000 at reduced customs duty of 15 per cent for a period of 5 years from the Application Approval Date.

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The approved applicants would be required to make a minimum investment of Rs 4,150 crore in line with the provisions of the scheme.

The Scheme to Promote Manufacturing of Electric Passenger Cars in India was notified on March 15, 2024.

(With inputs from PTI)