The Indian government is set to introduce a new Electric Vehicle (EV) policy aimed at reducing import duties and attracting global manufacturers like Tesla. The policy mandates a minimum turnover of Rs 2,500 crore by the second year and requires an investment of Rs 4,150 crore. Approved manufacturers will qualify for a 15% import duty, significantly lower than the current 110%.
Lower Duties to Attract Investment
The proposed policy aims to encourage global EV manufacturers to set up local operations by lowering import duties. Companies meeting the criteria can import EVs at a reduced 15% tariff instead of the current 110%. However, past investments, land, and building costs will not be considered in the required investment amount.
Manufacturers have 120 days to apply, and the policy allows up to 8,000 premium EVs (priced above $35,000) to be imported annually under the new tax structure. Approved applicants must establish manufacturing units within three years and achieve 25% local value addition, which must increase to 50% within five years.
Progressive Turnover Targets
To qualify, manufacturers must meet specific turnover milestones:
- Rs 2,500 crore by the second year
- Rs 5,000 crore by the fourth year
- Rs 7,500 crore by the fifth year
Approval letters could be issued by July-August, enabling manufacturers to bring in premium EVs soon after. Tesla is expected to be a key beneficiary of this policy, with reports indicating its entry into India by April 2025.
Tesla Plans Expansion in India
Tesla is reportedly planning to introduce an affordable EV in India, priced at Rs 21-22 lakh. The company has chosen Mumbai and Delhi as its initial showroom locations. Tesla Inc. will soon begin shipping cars to a port near Mumbai, aiming to launch sales in Mumbai, Delhi, and Bangalore by the third quarter of 2025.
Other Automakers Show Interest
Hyundai and Volkswagen have also shown interest in the new policy during discussions with the government, though their investment plans remain uncertain. With the government focusing on accelerating EV adoption, this policy could open the Indian market to global EV players, strengthen local manufacturing, and make premium electric vehicles more affordable for buyers.
