Recently, the Government of India has approved a new electric vehicle (EV) policy, opening the doors for the potential entry of global giants such as Tesla into the Indian automotive market. This policy, as outlined by the Ministry of Commerce and Industry, is strategically designed to attract investments from prominent international EV manufacturers, thereby fostering growth in India’s burgeoning e-vehicle sector.
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As per the stipulations of the new policy, companies seeking to participate are mandated to invest a minimum of Rs 4,150 crore within the Indian territory. Within a timeframe of three years, these companies are expected to establish local manufacturing units dedicated to the production of EVs, ensuring a minimum localization level of 25%.
Furthermore, the policy introduces provisions allowing companies to import up to 8,000 EVs annually at a reduced import duty of 15% for vehicles priced at $35,000 and above. This significant reduction in import duties, compared to the existing rates of 70-100% on imported vehicles, is aimed at facilitating easier access to the Indian market for international players. However, it is important to note that the duty exemption for imported EVs is capped at either the annual Production Linked Incentive (PLI) incentive, amounting to Rs 6,484 crore, or the investment made by the entity, whichever is lower. Additionally, companies are required to furnish a bank guarantee as a validation of their investment commitment, which will be enforced in cases of non-compliance with the predefined criteria outlined in the scheme guidelines.