India’s electric vehicle (EV) sector received a major shot in the arm with the central government’s approval of a much-anticipated policy package. The new e-vehicle policy approved by the centre will attract investments from renowned global EV manufacturers. Now, let’s take a quick look at the key points of this new EV policy and how it could pave the way for Tesla to enter the Indian market, although certain conditions must be met first.
Key highlights of the policy include a minimum investment requirement of Rs 4,150 crore (approximately USD 500 million), with no ceiling on the maximum investment amount. Companies establishing manufacturing facilities for EVs will be granted a three-year window to set up operations in India and to begin production of EVs. Import duty slashed to 15% paving way for Tesla’s arrival
For the global players who intend to set up facilities in India, much like Elon Musk-led Tesla, limited imports of EVs will be permitted at a lower customs duty rate of 15% for vehicles with a minimum CIF value of USD 35,000. However, this concessional rate will be applicable only if the manufacturer establishes manufacturing facilities in India within a three-year timeframe with an investment of USD 500 million.
The amount of duty not paid on all the EVs allowed to be brought into the country will be limited, and no more than 40,000 EVs can be brought in each year following specific rules. To make sure that companies follow the rules of the scheme, the manufacturers will have to provide a bank guarantee equal to the duty not paid, which will be used if they don’t meet the specified criteria for domestic value addition (DVA) and investment.
This new EV policy sets the stage for a potential game-changer in the Indian electric vehicle market, with the imminent arrival of Tesla and other global manufacturers. The policy framework aims to boost domestic manufacturing, create job opportunities, and drive the adoption of environmentally friendly transportation options in the country. The ball is now in the court of international EV giants to seize this opportunity and revolutionize the Indian EV landscape.
