By Tesla has been trying to enter the Indian market for some time now but the American manufacturer wants the government to make some changes to the import policy to make it happen. Finally, the central government has announced a new EV policy. Under the revised policy, the government has outlined several incentives aimed at attracting foreign investment in the EV sector. One of the key provisions is a reduction in import taxes for select electric vehicles, depending upon companies committing substantial investments in India. Specifically, companies committing a minimum of Rs 4150 crore (approximately $500 million) and establishing local manufacturing facilities will benefit from reduced import duties.
To qualify for these incentives, companies must meet stringent criteria, including the establishment of domestic manufacturing facilities within three years. Additionally, they are required to ensure a gradual increase in the domestic value addition (DVA) of their products, reaching 50 per cent localization within five years. This emphasis on local production aligns with the government’s broader agenda of promoting indigenous manufacturing and reducing dependency on imports. Furthermore, the policy introduces a tiered approach, wherein companies investing higher amounts stand to gain greater import concessions.
For instance, businesses committing $800 million or more could import up to 40,000 EVs annually, subject to certain conditions. Crucially, to ensure the sincerity of these investment pledges, companies are mandated to furnish bank guarantees equivalent to the customs duties forgone. This measure aims to safeguard against potential backtracking on commitments made. The unveiling of this EV policy marks a significant step forward in India’s efforts to incentivize the adoption of electric vehicles and attract global players like Tesla to its burgeoning market. By offering a conducive regulatory framework and financial incentives, the government aims to accelerate the transition towards sustainable mobility while stimulating economic growth in the EV sector.
