Indian government plans to reduce import duty on EVs from 110% to 15%

The Indian government is reportedly working on introducing a transformative EV policy that includes a substantial reduction in import duties on premium electric vehicles, aiming to attract major global EV manufacturers like Tesla and boost the adoption of EVs in the country.

The proposed policy would significantly reduce the import duty from the current 110% to just 15%.

Applicability

The proposed reduction would apply only to premium EVs priced above $35,000 which converted into INR is approximately ₹26 lakh.

The proposed policy is currently awaiting approval from Heavy Industries Minister H.D. Kumaraswamy.

An official notification from the government is anticipated in the upcoming weeks, after which the application process would begin.

Once the policy is officially approved, global EV manufacturers will have an application window of 120 days to apply for the same.

However, to qualify for the reduced import duties and benefit from the same, the global EV manufacturers will need to meet the following conditions:

• A minimum investment of Rs 4,150 crore would be required (excluding the amount of past investments and land or building acquisition costs).
• Required to set up a local manufacturing facility within 3 years of approval.
• Required to establish assembly units, could be set up within existing facilities as well.

Manufacturers will also have to meet future turnover targets:

• Reach a turnover of Rs 2,500 crore by the second year.
• Reach a turnover of Rs 5,000 crore by the fourth year
• Reach a turnover of Rs 7,500 crore by the fifth year

Manufacturers will also have to meet local value-addition percentages:

• Achieve 25 per cent local value addition initially, which later increases gradually to 50 per cent within 5 years.

Permit

Once these conditions are met with, approved manufacturers will be permitted to import up to 8,000 premium EVs yearly at the reduced import duty rate.

Its benefit to Tesla?

Tesla is most likely to be the first manufacturer to benefit from this proposed EV policy, expected to make their electric vehicles much more competitively priced in India.

Previously, during a meeting in the USA, Elon Musk had reportedly urged PM Narendra Modi to reduce import tariffs and offer concessions for electric vehicles.

The policy is also expected to encourage other major EV manufacturers to expand their presence in the country, while pre-existing premium brands will benefit from enhanced affordability.

Final Thoughts

This shift in import policy aims to accelerate EV adoption, encourage domestic production of EVs and enhance the affordability of premium electric vehicles in the country. This move is likely to bring in various global EV manufacturers, driving investment and boosting the country’s electric mobility objectives.

In conclusion, this initiative by the government marks an important step in shaping the country’s transition to sustainable mobility by making premium electric vehicles more accessible and affordable.