The government has approved a new scheme aimed at bolstering the electric vehicle (EV) sector in India, with a key focus on transforming the nation into a prominent manufacturing hub for electric vehicles. According to a statement by the Ministry of Commerce & Industry, the policy aims to attract investments from reputable global EV manufacturers, fostering a competitive environment conducive to increased production volumes, economies of scale, and reduced manufacturing costs. Additionally, the policy seeks to address pressing issues such as decreasing crude oil imports, narrowing the trade deficit, curbing urban air pollution, and promoting positive health and environmental outcomes.
Key Features of the New Policy
Under the new policy framework, certain electric vehicles will benefit from reduced import duties, subject to the condition that the manufacturing company commits to significant investments and establishes a manufacturing facility within India within a stipulated timeframe of three years. This strategic move is expected to stimulate foreign investment inflows, potentially attracting companies like Elon Musk’s Tesla, thus contributing significantly to the growth and development of the Indian EV industry.
The new EV policy includes the following provisions:
| Provision | Requirements |
|---|---|
| Customs Duty for CIF value of USD 35,000 | 15% duty for five years if the manufacturer establishes a facility in India within three years. |
| Localization Targets | Achieve 25% and 50% localization by the third and fifth years, respectively. |
| Duty Foregone Limit | Limited to the investment or Rs 6,484 crore, whichever is lower. |
| Maximum Number of EVs Allowed for Import | Up to 40,000 EVs or 8,000 per year with an investment of USD 800 million or more. |
| Carryover of Unutilized Import Limits | Allowed. |
| Bank Guarantee for Investment Commitment | Required to back up the investment commitment. |
| Shareholding Restriction | Companies cannot dilute their shareholding during the scheme tenure. |
A BOON FOR TESLA?
The approval of India’s new EV policy presents a significant opportunity for foreign companies like Tesla, particularly in terms of reducing import duties and streamlining investment requirements. Tesla, which has been advocating for reduced import duties for some time now, stands to benefit from the policy’s provisions aimed at attracting substantial investments and encouraging localization efforts. With the government’s support, Tesla and other global EV manufacturers can leverage this conducive regulatory environment to expand their presence in India’s growing electric vehicle market, driving innovation and contributing to the nation’s sustainable mobility objectives. This move aligns with Tesla’s long-term vision of establishing a strong foothold in emerging markets while accelerating the global transition to sustainable transportation.
Read More: Tesla to Ship its EVs to India by next year and set up a factory in Two Years
