Confusion over EV policy may cast a shadow over VinFast’s TN investment

Confusion over when benefits/subsidy under the new EV policy would start accruing has cast a shadow over Vietnamese EV-maker VinFast’s $2-billion investment in a plant coming up at Thoothukudi in Tamil Nadu.

Sources privy to a meeting of stakeholders held at the Ministry of Heavy Industries (MHI) on April 18 told businessline: “Pham Sanh Chau, Chief Executive Oªcer of VinFast India, who attended the meeting from Hanoi via video link, got confused after learning from the MHI Secretary that any benefit/subsidy that a company seeks to get will be applicable only when the policy is in place, and not from the date an OEM starts investment.” The meeting at the MHI was chaired by Secretary Kamran Rizvi and Additional Secretary Hanif Qureshi.

Sources said in their meeting this January with the Commerce Minister Piyush Goyal, Vinfast leadership got the distinct impression that the benefits would be applicable from the day a company starts its investment in India.

GRANULAR DETAILS

The government apparently clarified a few other points as well. “I think there was some misunderstanding...VinFast had a misconception that it can invest $500 million by the fifth year. But the policy clearly mentions that you have to invest that by the third year. In the third year, you should have completed your $500 million investment and the vehicles should roll out of the plant with 25 per cent domestic value addition (DVA),” an oªcial said.

The policy clearly mentions that if you don’t invest $500 million in the first three years, then the bank guarantee will not be considered. Second, it was VinFast’s understanding that the investment in Thoothukudi from January will be counted (from the day construction of the plant started), but the policy says it will be counted only after 240 days. The first 120 days (four months) is called application window; then there is another 120 days for MHI to evaluate the proposal and confirm. After the confirmation letter comes from the Ministry then the investment cycle will begin, that means their investment cycle will begin only after eight months, the oªcial explained.

Queries sent to VinFast through e-mail did not elicit any response till the time of going to press.