Vietnam-based electric vehicle (EV) maker VinFast’s Rs 160 billion (USD 2 billion) investment in Tamil Nadu will not qualify for benefits under India’s recently launched Scheme to Promote Manufacturing of Electric Passenger Cars, officials confirmed on Monday.

The government clarified that to be eligible for incentives, investments must be capitalised only after formal approval under the scheme. Existing capital expenditures—such as VinFast’s ongoing work in Thoothukudi—do not meet the criteria, as the equipment and machinery must be put to use post-approval.

“They have already capitalised their investment and will not qualify under the current terms,” said an official, adding that VinFast would need to make a fresh investment of Rs 4.15 billion to become eligible. The company had appealed for consideration of its existing investment but the request was declined.

VinFast, a subsidiary of Vingroup, is preparing to launch its VF6 and VF7 models in India ahead of the upcoming festive season and plans to scale up local production to 150,000 EVs annually, targeting exports to the Middle East and Africa. It is also exploring expansion into Andhra Pradesh and Telangana.

As per the scheme guidelines notified on 15 March 2024, approved applicants will be allowed to import completely built electric cars (CBUs) with a minimum CIF value of USD 35,000 at a reduced customs duty of 15 per cent for a period of five years from the date of approval. The scheme mandates a minimum investment of Rs 4.15 billion by each applicant.

The application window for the scheme is expected to open in the coming weeks and will remain open for at least 120 days.