Updated March 15th, 2024 at 19:16 IST

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

This decision reflects India's ambitions to accelerate the adoption of electric vehicles.

Reported by: Business Desk
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Import duties slashed: The union government has announced a significant reduction in import taxes on certain EVs. Under the 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 the Indian market.

Companies that meet the 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 their value.

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

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

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Crucially, the policy includes safeguards to ensure accountability and protect government interests. Provisions such as caps on the number of imported EVs limits on duty concessions, and requirements for companies to back investment commitments with bank guarantees underscore the 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, the coming years could witness a dynamic transformation in India's automotive sector, with electric vehicles poised to play a central role in shaping the future of mobility.

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With Reuters Inputs

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Published March 15th, 2024 at 19:16 IST