Govt Considers Cutting EV Import Duty From 110% to 15%, Could This Bring Tesla to India?

The Indian government is reportedly considering a significant reduction in import duties on electric vehicles (EVs) from a whopping 110% to just 15%. This move aims to expand the availability of global EV options and attract foreign automakers, such as Tesla, to enter the Indian market. While no official announcement has been made yet, reports suggest that the new EV policy will come with specific conditions for manufacturers. For example, any interested EV maker will be required to invest a minimum of Rs 4,150 crore (around USD 500 million) in India, excluding prior investments or costs related to land and infrastructure.

Additionally, manufacturers will need to meet revenue targets, starting with Rs 2,500 crore by the second year, progressing to Rs 5,000 crore by the fourth year, and reaching Rs 7,500 crore by the fifth year, as outlined in a report by the Economic Times.

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In addition, prospective manufacturers will be required to set up operational production facilities within three years and ensure a minimum of 25% domestic value addition at the outset, gradually increasing to 50% within five years following government approval.

After these conditions are met, interested EV companies will be able to take advantage of the recently lowered import duty rates and import up to 8,000 luxury EVs, each costing more than USD 35,000 (about Rs 30 lakh). With everything on track, approval letters are expected to be issued by July or August. Following the policy's enactment, automakers will have 120 days to submit applications for approval.

Tesla’s India Debut on the Cards with Possible EV Import Duty Reductions?

Tesla's long-standing ambitions to enter the Indian market have been delayed due to several challenges, with high import taxes being a key hurdle. However, with the proposed policy changes, the American electric vehicle giant may finally be able to accelerate its long-awaited entry into India.

Also Read: Following Modi-Musk Meeting, Tesla Hints India Entry with Job Listings

Recently, Tesla posted multiple job openings in India for roles like store managers, service technicians, and service advisors. This comes after a meeting between Tesla CEO Elon Musk and Indian Prime Minister Narendra Modi during the latter’s visit to the U.S. While Tesla has yet to make an official statement, the job listings, particularly those centered around Mumbai, have sparked rumours that the company is planning to set up its first fully operational dealership in the city. This recruitment initiative highlights the brand’s commitment to expanding its footprint in India, a market that plays a crucial role in its global growth strategy.