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The Indian government has implemented a new policy aimed at boosting the electric vehicle (EV) industry by significantly reducing import taxes, particularly benefiting global manufacturers like Tesla. This move is part of a broader strategy to attract investments and promote the adoption of EVs in the country.
Under the new policy, import taxes on a certain number of EVs have been slashed by up to 85%, making it more financially feasible for global players to enter the Indian market. This development is expected to bolster Tesla’s plans to establish a manufacturing plant in Gujarat, as reported by Bloomberg in December.
Elon Musk, CEO of Tesla, has previously expressed interest in the Indian market but has raised concerns about high import duties, which have made Tesla cars relatively expensive in India. The government has urged Tesla to set up manufacturing facilities within the country to benefit from reduced import duties and promote domestic production for both local sales and exports.
The policy requires EV companies to invest a minimum of ₹4,150 crore and establish production facilities within three years, with a target of achieving 50% domestic value addition (DVA) within five years. This includes significant localization targets of 25% by the third year and 50% by the fifth year.
Companies that meet these criteria can import a maximum of 8,000 EVs annually for five years at a reduced import duty of 15%. This reduced duty is capped at the investment made by the company or ₹6,484 crore, whichever is lower. It’s important to note that this benefit applies only to completely knocked down (CKD) units, where vehicles arrive in pieces and are assembled in India.
While Tesla stands to benefit from this policy, other EV manufacturers like VinFast from Vietnam have also expressed interest in reduced import duties to promote EV adoption in India. However, local players such as Mahindra and Tata have raised concerns about the policy, advocating for stronger support for domestic manufacturers to create a robust automotive industry in India.
The government’s move comes as part of its larger vision to increase the share of EVs in total car sales from 2% to 30% by 2030. Various measures are being implemented to attract manufacturers and accelerate the transition towards sustainable mobility solutions in India.
Sources By Agencies
