India has announced to lower EV import tax for Tesla and other EV companies that are ready to invest $500 million in the country’s EV sector. This strategic move aims to transform India into a leading hub for cutting-edge electric vehicle manufacturing.

Previously, imported vehicles faced tariffs as high as 100%, but under the new policy, EVs costing more than $35,000 will now be subject to just a 15% customs duty. This reduction is contingent upon automakers committing to a minimum investment of 41.5 billion rupees ($500 million) in local production facilities.

Attracting Global Players

The policy specifically aims to attract major international manufacturers like Tesla and Vietnam’s VinFast by making the Indian market more accessible. Tesla has been keen on entering the Indian market, which could now become a reality with more competitive pricing due to the lowered tariffs.

Under the new scheme, electric vehicles can be imported at a reduced duty of 15%, applicable temporarily for up to 40,000 units, with an annual cap of 8,000 units over five years. This initiative aims to catalyze the establishment of local manufacturing facilities by international players, fostering a vibrant ecosystem for EV technology in India.

Investment and Manufacturing Milestones

The policy mandates a substantial minimum investment of Rs. 4,150 crore ($500 million), envisioning a robust infrastructure for EV production within the country. Automakers are given a three-year window to set up manufacturing operations, with a phased requirement to achieve 50% value addition in five years, starting with 25% by the third year.

Conditions and Incentives

Eligibility for the reduced customs duty hinges on the vehicle’s minimum CIF value being USD 35,000 and above. The incentive, designed to fast-track the transition to electric mobility, caps the duty benefit to the lower of the total investment made or ₹6,484 Crore, aligning with incentives under the Production Linked Incentive (PLI) scheme.

A Catalyst for Change

As India is set to lower EV import tax, this not only opens the floodgates for Tesla and other international EV manufacturers but also underscores India’s commitment to becoming a global hub for electric vehicle production. It promises to accelerate the adoption of eco-friendly vehicles, reduce carbon emissions, and drive the nation towards a greener future.

As Tesla’s CEO Elon Musk hints at the possibility Giga India with enthusiasm, the new EV policy could indeed be the spark that electrifies India’s automotive landscape.

Image Source: Hindustan Times Auto News