India’s government has unveiled a new electric vehicle (EV) scheme featuring tax relief, aiming to establish the nation as a premier manufacturing hub. The move comes as India endeavors to attract foreign investment, including from giants like Tesla, to bolster local production.
Under the plan, India intends to reduce import taxes on select EVs for companies committing to investments exceeding $500 million and setting up manufacturing units within three years. This significant initiative not only targets attracting industry heavyweights like Tesla but also emphasizes India’s proactive approach to leveraging foreign investment for local production and fostering a robust EV ecosystem.
“The policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers,” stated the government.
The scheme requires a minimum investment of Rs 4,150 crore (approximately $500 million), with no upper limit, enabling advanced technology to be locally produced. For EVs with a minimum CIF value of $35,000, a 15% customs duty will be imposed for five years, contingent upon the establishment of manufacturing facilities within three years. The duty foregone will be capped at the investment made or ₹6,484 crore.
Manufacturers must establish production facilities within three years and achieve a domestic value addition of at least 50% within five years, alongside a 25% localization level by the third year. Companies are also required to support their investment commitments with a bank guarantee.
India’s Commerce and Industry Minister Piyush Goyal emphasized that India’s policies are independent and not tailored to suit any specific company, including Tesla. While Tesla’s request for tariff concessions has been noted, the government aims to create regulations conducive to attracting global EV manufacturers to India.
Goyal highlighted the importance of fostering a robust EV ecosystem, which aligns with India’s goals of reducing emissions and curbing oil import expenses. However, he reiterated that India’s policies prioritize creating an environment favorable to all-electric vehicle manufacturers, rather than catering to individual company interests.
