India’s New EV Policy: Reduced Import Taxes for Local Manufacturing


India is actively working on a new electric vehicle (EV) policy, responding to a proposal from Tesla, as the country aims to boost its EV market. The policy is set to decrease import taxes for automakers that commit to local manufacturing. A move that could have significant implications for the industry.

Under the policy’s consideration, automakers might benefit from importing fully-built EVs with taxes as low as 15%, a substantial drop from the current 100% and 70% rates.

Tesla’s suggestion has garnered interest from Indian officials, although the commerce ministry and Tesla have yet to comment.

The potential reduction in import taxes could lead to substantial cost savings for imported EVs, making them more attractive to Indian consumers.

This move aligns with India’s growing interest in electric vehicles. Where EV sales remain a small fraction of the total automobile market but are rapidly expanding.

The proposed policy would also enable Tesla to offer its complete range of models in India. Potentially boosting the company’s presence.

However, such a policy could disrupt the domestic market and impact local manufacturers like Tata Motors and Mahindra & Mahindra. Which have invested in local EV production. Thus, Indian authorities are proceeding cautiously to evaluate potential consequences.

While Tesla has expressed interest in setting up local manufacturing in India. And introducing a more affordable EV model for the market. The government remains cautious about potential disruptions.

Meetings between Tesla representatives and Indian officials, including Prime Minister Narendra Modi, have indicated high-level interest in the proposal.

The policy remains in its early stages and the final tax rates could change. Yet, it signals India’s intent to align with global trends in EV adoption and incentivize the production of electric vehicles domestically.