The Indian government is developing an EV policy, offering lower duty rates for foreign carmakers to import electric vehicles. This incentive is conditional on their commitment to local manufacturing in India.
India is contemplating reducing taxes on fully-built electric vehicle imports for up to five years to attract companies like Tesla Inc. to start selling and eventually manufacture cars locally. The government is formulating an EV policy to permit global carmakers to import electric vehicles at lower duties, with the condition that they can be built in India later.
No final decision has been made on the policy details, and the discussions are confidential, said the sources, who requested anonymity. India’s heavy industries and commerce ministries’ spokespeople did not immediately reply to emails for comment. In 2021, Austin-based Tesla asked to reduce import duties for electric vehicles, hoping to lower rates to 40% from the existing 70%-100%, based on import value.
Elon Musk, CEO of Tesla, is expected to meet Indian Trade Minister Piyush Goyal in San Francisco, where Goyal is attending the Indo-Pacific Economic Framework and Asia-Pacific Economic Cooperation meetings.
Tesla aims to enter a rapidly growing Indian auto market, where electric vehicle demand is increasing among the middle class. Tesla’s investment in India would support the government’s goal to expand manufacturing’s contribution to GDP and generate jobs.
India’s electric car market is still developing, with EVs making up only 1.3% of total passenger vehicle sales last year, as per BloombergNEF. High car costs, limited options, and scarce charging stations have slowed EV adoption in India.
Liberalizing the EV sector could accelerate the shift to cleaner transportation in a nation with some of the worst air quality globally. The government launched a $3.1 billion incentive program in 2021 to encourage local EV production.