Vietnamese electric vehicle company VinFast, sometimes described as the Asian Tesla, is gung-ho on the potential of the Indian market. True to the ‘fast’ in its title, VinFast Asia CEO Pham Sanh Chau says the company has moved “very fast” in setting up a manufacturing facility in India, in bringing some of its existing products here, in scouting for dealerships and expanding its presence across the country. The company has already announced premium electric SUVs VF7 and VF6 and would be expanding its electric four wheeler range with VF3, VFe34, VF8 and VF 9 eventually. “India is a premium car mecca. That is why we want to come in and launch premium vehicles…our vehicles will be affordable,” Pham told ETAuto. VinFast has also already begun scouting for contract manufacturers to bring its electric two wheeler portfolio to the country. The commercial vehicle range, though, will take some time as the products need to be converted to the right hand drive system.
This fast and furious expansion is happening even as VinFast is awaiting some hand holding from the government in the form of a concessional import duty regime that India is willing to offer to those global electric vehicle OEMs who commit themselves to invest in setting up a manufacturing base for electric vehicles in the country. VinFast, which has set up a 50,000 units manufacturing facility in Tamil Nadu, missed the mark by a few weeks. In a rush to announce the Scheme for Manufacturing of Electric Cars (SMEC) policy before the model code of conduct kicked in March this year due to the impending General Elections, the government had announced concessional import tariffs as long as there was fresh investment in manufacturing in India. Since VinFast investment was categorised as ‘brownfield’ instead of greenfield, the company does not qualify for concessions under this policy, as of now.
Sources tell us that the company has requested the government to extend the concessions meant for Tesla to VinFast too. When asked, Pham Sanh Chau, told ETAuto that “the government has been very supportive. But since we moved very fast and started construction … after we started construction the SMEC came out. So we became the brownfield project.” He said that in which ever market VinFast has entered globally, it has always been welcomed and India has not been an exception. “Perhaps because we moved very fast, the policy could not be adjusted.
We have no issue if the SMEC does not include us, we will continue to come in because we think the government will support us one way or the other”.So what alternative ways can the government support VinFast in? “I leave that to the government to decide,” Chau said.
Chau said that in the last 10 months, after completing the ground breaking ceremony at its manufacturing plant in Tamil Nadu, the company is gearing up to launch VF7 and VF6 before Diwali 2025. Production will begin in the second half of the calendar year and both models will be made in India.
The Scheme:
In March this year, the Centre approved the SMEC policy which allows OEMs that investa minimum of Rs 4150 crore and which meet domestic value added conditions to import a limited number of vehciles at a concessional duty. The policy allows investors three. years to set up manufacyturing facilities in India, start commercial production and reach the 50% DVA within five years. In lieu of this, OEMs are allowed to import cars with CIF value of USD 35,000 or more at a steep duty cut. The number of vehicles which can be imported under this policy is 8000 units each year.
Since the policy was unvelied, though, not a single application has been received by any global OEM for consideration. Tesla, which was widely expected to have pushed for this policy, developed cold feet and did not send in any proposal. Now, there are some discussions by OEMs with the Ministry of Heavy Industries to allow brownfield investments to also qualify for lower import duties but no final decision has been taken as yet. The SOP guidelines have also not been issued under the policy till now.
