New EV policy to reduce import duty to 15 percent

The government is set to announce a new EV policy that will reduce import duties on electric cars from 110 percent to 15 percent to attract major global electric carmakers like Tesla to India. Interested carmakers have an application window of 120 days but must meet specific criteria to qualify for the slashed import tariff.

1. Interested carmakers must invest Rs 4,150 crore and meet other criteria
2. It will allow each of them to import 8,000 premium EVs annually at the concessional tax rate
3. The policy could be a boon for Tesla’s forthcoming India launch

EV import duty reduction policy explained

Under the upcoming policy, the carmakers must invest Rs 4,150 crore to ensure commitment to the Indian 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, they must achieve progressive annual turnover milestones: Rs 2,500 crore by the second year, Rs 5,000 crore by the fourth year, and Rs 7,500 crore by the fifth year. Within these five years, 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 lower import duty will be applicable for up to 8,000 premium EVs (priced above $35,000) annually, beyond 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 company to price its all-electric offerings more attractively here. Companies like BYD, which already sell premium EVs in India, might also be able to make their cars more accessible for price-sensitive buyers.

Source

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