India has introduced a new electric vehicle (EV) policy that reduces import taxes to 15% for carmakers willing to invest a minimum of $500 million and start local production within three years. This move is particularly beneficial to Tesla, which has been advocating for lower import taxes to facilitate its entry into the Indian market. Despite opposition from local manufacturers like Mahindra and Tata, the policy aims to invigorate Tesla’s plans and attract global companies to India, potentially turning the country into an EV manufacturing hub.

The adjusted tax rate applies to EVs valued at $35,000 or more, with a cap of 8,000 vehicles per year, and will be in effect for up to five years. Previously, imported EVs faced taxes of 70% to 100%. The policy arrives amidst a slowdown in global EV sales growth, but it is expected to open India’s market to new players and technologies, stimulating competition and innovation. Tesla, facing a demand slump and increased competition from companies like China’s BYD, has not commented on the new policy. Meanwhile, shares of Indian carmakers Mahindra and Tata Motors dropped following the announcement.

India’s EV market, though currently small, is poised for growth, with electric models constituting about 2% of the country’s total car sales in 2023, and the government targeting a 30% share by 2030. The new policy is seen as a strategic step to boost the EV sector, create jobs, and improve trade, according to India’s commerce minister Piyush Goyal. Other international players like Vietnam’s VinFast have also shown interest in investing in India’s burgeoning EV market.

Key Takeaways:

  • India has introduced a policy that reduces import taxes on electric vehicles for manufacturers investing at least $500 million and starting local production within three years.
  • The new policy allows eligible companies to import up to 8,000 EVs annually at a reduced tax rate of 15%, significantly lower than the previous rates of 70% to 100%.
  • This initiative aims to make India a global hub for EV manufacturing, encouraging international automakers to enter the Indian market and potentially boosting job creation and trade.

“India on Friday lowered import taxes on certain electric vehicles produced by carmakers that commit to invest at least $500 million and start domestic manufacturing within three years, bolstering Tesla’s plans for the market.”

More details: here