The Indian government is set to announce a new EV policy that will significantly reduce import duties for electric cars. Currently set at 110 percent, the EV import tax will soon be dropped to 15 percent in a bid to attract major global electric car companies like Tesla to India.
- Upcoming EV policy will drop electric car import duty from 110 percent to 15 percent
- Interested manufacturers must invest Rs 4,150 crore and meet other criteria
- The policy could be a boon for Tesla's forthcoming India launch
EV import duty reduction policy explained
Interested carmakers have an application window of 120 days, but they must meet a set of criteria to qualify for the slashed import tariffs. First off, the upcoming policy will mandate an investment of Rs 4,150 crore to ensure commitment to the Indian car market. Manufacturers will also be permitted to set up assembly operations in existing production plants, but prior investments and land/building costs shall be excluded from the initial investment amount.
Secondly, carmakers must achieve progressive annual turnover milestones, starting with Rs 2,500 crore by the second year, then Rs 5,000 crore by the fourth year, and finally Rs 7,500 crore by the fifth year. Within this five-year period, approved manufacturers must open local production plants by the end of the third year and achieve 25 percent local value addition, which should be increased to 50 percent by the end of the fifth year.
New EV policy may benefit Tesla's plans to enter India
The reduced import duty will be applicable for up to 8,000 premium EVs (priced above $35,000) annually, following which the current 110 percent duty will be levied. The government may begin issuing approval letters to compliant carmakers by August 2025. With Tesla finalising plans to enter the Indian market this year, the new EV policy could allow the American manufacturer to price its all-electric offerings more attractively here. Existing carmakers like BYD that already sell premium EVs in India might also be able to make their cars more accessible for price-sensitive buyers.
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