India slashes EV Import Taxes, paving the way for Tesla and global automakers

Import duties slashed: union government has announced a significant reduction in import taxes on certain EVs. Under new policy, companies willing to invest a minimum of $500 million and establish a manufacturing plant within three years will benefit from lower import duties, marking a crucial victory for Tesla, which has long sought entry into Indian market.

Companies that meet investment and manufacturing requirements will be allowed to import a limited number of EVs at a lower tax of 15 per cent on cars costing $35,000 and above. India currently levies a tax of 70 per cent or 100 per cent on imported cars and EVs depending on ir value.

This decision reflects India's ambitions to accelerate option of electric vehicles. By offering incentives to major players like Tesla, government aims to foster competition and drive innovation in burgeoning EV sector. This move could potentially reshape India's automotive landscape, as country aims to increase share of electric vehicles in total car sales to 30 per cent by 2030.

decision to slash import duty has sparked concerns among domestic players such as Tata Motors and Mahindra & Mahindra. se companies fear that reduced import taxes could undermine competitiveness of locally manufactured EVs. Neverless, government asserts that policy is designed to promote healthy competition and stimulate production scale, ultimately driving down costs within EV ecosystem.

Crucially, policy includes safeguards to ensure accountability and protect government interests. Provisions such as caps on number of imported EVs limits on duty concessions, and requirements for companies to back investment commitments with bank guarantees underscore government's commitment to responsible economic policies.

Overall, India's move to lower import taxes on EVs represents a strategic step towards achieving its vision of a sustainable, technology-driven automotive industry. As global players like Tesla gear up to capitalise on this opportunity, coming years could witness a dynamic transformation in India's automotive sector, with electric vehicles poised to play a central role in shaping future of mobility.

With Reuters Inputs