MHI Issues Update on Localization Rules in PM E-Drive Scheme to Boost Domestic EV Manufacturing
The government has banned the import of battery modules, requiring all production, including cell-to-cell connections, bus bar fitment, and thermal management system integration, to take place in India.
March 05, 2025. By Aishwarya
The updated policy, published in the Official Gazette, brings stricter localization requirements under the Phased Manufacturing Programme (PMP), impacting various categories of EVs, including electric two-wheelers, three-wheelers, and buses.
Under the revised guidelines, key EV components such as traction battery packs, battery management systems (BMS), vehicle control units (VCUs), DC-DC converters, onboard chargers, and traction motors must now be manufactured domestically.
The government has banned the import of battery modules, requiring all production, including cell-to-cell connections, bus bar fitment, and thermal management system integration, to take place in India. For battery management systems, components such as printed circuit board (PCB) assemblies, semiconductor integration, and firmware flashing will also need to be produced locally.
The new regulations will take effect in phases. For electric two-wheelers (L1 & L2) and three-wheelers (L5, E-Rickshaws, and E-Carts), the revised PMP conditions will be enforced from May 1, 2025. Meanwhile, for electric buses (M2/M3), components such as HVAC systems, electric compressors for brakes, and CCS2 charging inlets must be locally manufactured within six months from the notification date. Certain parts, including battery management systems and DC-DC converters, have been given a 12-month transition period, allowing temporary imports before full localization becomes mandatory.
In an effort to reduce dependence on imports, the government has also prohibited the import of completely knocked down (CKD) kits for PMP components from a single foreign supplier.
Additionally, the definition of ‘manufacturing’ will follow the CGST Act, 2017, ensuring standard compliance for all domestic production. The notification also states that separate PMP guidelines for electric ambulances, electric trucks, and other emerging EV categories will be announced at a later stage.
The amendments to the PM E-DRIVE Scheme highlight the government’s commitment to promoting self-reliance in the EV industry by encouraging domestic production and reducing reliance on foreign imports. With these new regulations, industry players will need to adjust their supply chains and manufacturing processes to comply with the localization mandates before the deadlines. The official notification was signed by Dr. Hanif Qureshi, Additional Secretary, Ministry of Heavy Industries, reinforcing the government's vision of building a strong and sustainable electric vehicle ecosystem in India.
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