Indian Government to slash EV import duty from 110% to 15% in new policy

The Indian government is gearing up to announce a new Electric Vehicle (EV) policy that aims to reduce import duties and attract global players like Tesla. Under this proposed policy, import duties will drop from the current 110% to just 15%, which is expected to significantly boost interest from international automakers. The policy will also include strict investment and turnover requirements.

Key Features of the New Policy

Investment and Turnover Requirements: Manufacturers interested in participating must meet a minimum turnover of Rs 2,500 crore by the second year of operations and invest a total of Rs 4,150 crore. However, past investments and costs related to land and buildings will not be included in the required investment amount.

Reduced Import Duties for Approved Manufacturers: Companies that meet the investment criteria will benefit from the reduced 15% import duty. This reduction will apply to imports of up to 8,000 premium EVs (priced above $35,000) annually.

Local Manufacturing Requirements: In addition to the reduced import duties, manufacturers must establish local production facilities within three years and achieve a local value addition of 25%, increasing to 50% within five years.

Progressive Turnover Targets: The policy outlines a progressive turnover schedule:

Rs 2,500 crore by year two

Rs 5,000 crore by year four

Rs 7,500 crore by year five

Tesla and Other Automakers Eyeing India:

Tesla is expected to be one of the main beneficiaries of the policy. The company is reportedly preparing to launch an affordable EV priced around Rs 21-22 lakh in India by April 2025. Tesla plans to set up showrooms in Mumbai and Delhi, with an initial focus on these cities before expanding to Bangalore later in the year. The company also aims to ship thousands of cars to a Mumbai port in the coming months, with sales expected to begin in the third quarter of 2025.

Hyundai and Volkswagen are also reportedly interested in this policy, though their investment plans remain uncertain.

Impact of the Policy:

This new policy is poised to accelerate the adoption of EVs in India. By offering reduced duties and encouraging local manufacturing, it is expected to create opportunities for global EV brands, promote job creation, and make premium EVs more accessible to Indian consumers.

The government’s move is expected to pave the way for imported EVs to enter India by mid-2025, with approval letters expected to be issued between July and August 2025.