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VinFast Pursues India's SPMEPCI Scheme Amidst $500 Million Tamil Nadu Commitment
VinFast, the Vietnamese electric vehicle manufacturer, is making renewed efforts to participate in India's Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). This initiative, designed to attract significant foreign investment into domestic EV production, has stringent criteria. VinFast's re-engagement follows a substantial $500 million investment pledge for its manufacturing facility in Tamil Nadu [18, 20, 40]. The company had previously been excluded from subsidies under the scheme because its investment activities in India began in January 2024, prior to the SPMEPCI's formal approval in March 2024 and the opening of its application window in June 2025 [3, 4, 8, 9].
Overcoming Eligibility Hurdles
Pham Sanh Chau, Chief Executive Officer of Vingroup Asia and VinFast Asia, indicated that the previous application setback was due to the government's initial focus on attracting new entrants rather than existing investors. He stated, "Last time we missed the opportunity because they (government) tried to attract new investor, whereas we have become the old investor." [original text]. VinFast is actively engaged with the Ministry of Heavy Industries (MHI) to navigate these complexities. The company has already committed significant capital, with its CEO noting, "we have already invested the first $500 million, and the second $500 million," suggesting their commitment far exceeds the minimum required for the scheme [original text]. The SPMEPCI mandates a minimum investment of ₹4,150 crore (approximately $500 million USD) for electric four-wheeler (e-4W) manufacturing facilities [3, 4, 7].
Localization as a Strategic Imperative
A core objective for VinFast's strategy in India is maximizing localization to reduce production costs and enhance market competitiveness. Currently, the localization level stands at 15%, with the company actively engaging Indian suppliers like Uno Minda, Spark Minda, and MapmyIndia [original text]. Chau anticipates significant progress in this area by 2026, viewing it as a critical factor for success. Achieving domestic value addition (DVA) targets is paramount under the SPMEPCI, which requires applicants to reach 25% DVA within three years of approval and 50% within five years [3, 4, 7, 12].
The SPMEPCI Framework and Competitive Landscape
The SPMEPCI scheme offers qualifying manufacturers the benefit of importing up to 8,000 completely built units (CBUs) of e-4W annually at a reduced customs duty of 15%, subject to meeting investment and DVA conditions [3, 7]. The application window for the scheme, which opened on June 24, 2025, closed on October 21, 2025, though the MHI retains the right to reopen it until March 15, 2026 [9, 15, 23]. Despite the policy's aim to attract global giants, it has faced a slow uptake, with major players like Tesla opting out of manufacturing commitments in India, expressing interest only in sales [10, 21, 27, 34]. Other automakers, including Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia, have shown interest [3, 34]. VinFast’s Tamil Nadu plant, inaugurated on August 4, 2025, is being expanded to include electric buses and e-scooters, further cementing its long-term commitment to the Indian market [18, 20, 24, 33].
VinFast Auto (VFS) Financial Snapshot:
VinFast Auto Ltd. (NASDAQ: VFS) currently holds a market capitalization of approximately $7.86 billion USD as of January 2026 [5, 11, 13, 35]. The company's trailing twelve-month revenue stands at $2.55 billion, however, it has reported significant net losses, with a trailing twelve-month net income of -$3.50 billion and a gross margin of -56.17% for Q3 2025 [5, 35]. This financial backdrop adds a layer of scrutiny to its ambitious expansion plans in India.
Market Context and Outlook
VinFast's strategic push for SPMEPCI participation aligns with India's broader goal of becoming a global EV manufacturing hub, supported by initiatives like the FAME scheme and state-level incentives [38]. While VinFast navigates the regulatory pathway, domestic players like Tata Motors and Mahindra & Mahindra are actively expanding their EV portfolios and charging infrastructure [14, 17, 31]. The success of VinFast's bid for SPMEPCI incentives hinges on its ability to meet the scheme's demanding investment and localization requirements, especially as the application window nears its potential final closure. The company's proactive engagement and substantial investment signal its determination to establish a strong manufacturing footprint in India.