India's New EV Policy Cuts Import Duties For Global Automakers

The Indian government has launched a new electric vehicle (EV) policy that lowers import duties on electric cars from 110 percent down to 15 percent. This initiative aims to attract major global companies to invest in EV production in India, supporting the local economy and promoting cleaner transportation.

New EV Policy: Details

Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), offers lower import duties to companies that invest at least 500 million Dollars (approx. Rs 4,150 crore) in new EV manufacturing facilities in India within three years. Existing factories can also be utilized.

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To qualify for these benefits, manufacturers must meet certain criteria including the need to achieve an annual turnover of at least 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. Additionally, they must reach local value-addition targets of 25 percent by the third year and 50 percent by the fifth year.

Moreover, a 15 percent import duty reduction applies to fully-built electric vehicles priced above 35,000 Dollars (approx. Rs 30 lakh). Each eligible manufacturer can import up to 8,000 units each year, and any unused quota can be carried over to the next year. The maximum benefits from this duty reduction are topped at Rs 6,484 crore or the actual investment amount, whichever is lower.

Investments can cover expenses like research and development (R&D), machinery, and production tools. Up to 5 percent of the total investment can be spent on charging infrastructure, and up to 10 percent can go towards land and factory buildings.

(To be eligible for this scheme, automakers need at least Rs 10,000 crore in global automotive revenues and Rs 3,000 crore in assets)

New EV Policy: Tesla's Potential Entry

While the policy looks favorable with Tesla's past requests to lower import duties, the company isn't planning to set up manufacturing in India as of now. If Tesla decides to produce vehicles locally, it could benefit from lower tax rates. However, Tesla is currently focusing on importing cars, so they might miss out on the incentives offered by the new policy.