India Cuts EV Import Duty from 110% to 15% to Boost Market
In a strategic move to bolster its electric vehicle (EV) market, the Indian government is poised to reduce import duties on fully assembled EVs from the current 110% to 15%. This significant reduction aims to attract global automakers, notably Tesla, to establish a presence in India.
Key Highlights of the Proposed EV Policy:
- Reduced Import Duties: Premium EVs priced above $35,000 (approximately ₹30 lakh) will see import tariffs slashed from 110% to 15%. This reduction is contingent upon manufacturers meeting specific investment and production criteria.
- Investment Requirements: Automakers must invest a minimum of ₹4,150 crore (approximately $500 million) in local manufacturing. This investment excludes prior expenditures, as well as costs related to land acquisition and construction.
- Turnover Milestones: Manufacturers are expected to achieve a turnover of ₹2,500 crore by the second year of operations, escalating to ₹5,000 crore by the fourth year, and reaching ₹7,500 crore by the fifth year.
- Local Manufacturing and Value Addition: Companies are required to establish local manufacturing facilities within three years and ensure 25% domestic value addition, which should increase to 50% within five years.
- Import Quota: Eligible manufacturers will be permitted to import up to 8,000 premium EVs annually at the reduced duty rate.
The application window for automakers is expected to open within 120 days following the official announcement of the policy. Approval letters could be issued as early as July-August 2025, facilitating the import of premium EVs into the Indian market shortly thereafter.
Tesla, the American EV giant, stands to benefit significantly from this policy shift. Reports suggest that Tesla plans to introduce an affordable EV in India by April 2025, priced between ₹21–22 lakh. The company is also expected to inaugurate showrooms in major cities like Delhi and Mumbai, with sales operations commencing by the third quarter of 2025.
Other global automakers, including Hyundai and Volkswagen, have also expressed interest in entering the Indian EV market under the new policy framework. This initiative is anticipated to invigorate India’s EV sector, promoting sustainable transportation solutions and reducing dependence on fossil fuels.
However, the policy has not been without controversy. Former U.S. President Donald Trump criticized Tesla’s potential expansion into India, describing it as “unfair” to American interests. He highlighted India’s high automotive tariffs and the challenges U.S. manufacturers face in accessing the Indian market.
Despite such criticisms, India’s commitment to fostering a robust EV ecosystem remains steadfast. The government’s focus on attracting foreign investment and encouraging local manufacturing is poised to transform the country’s automotive landscape, making electric vehicles more accessible to the Indian populace.
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