India unveils new policy to slash EV import duties

India has finally introduced a new policy that will significantly lower import taxes for electric vehicles (EVs), but only under specific conditions.

Under the new policy, automakers must commit to an investment of at least US$500 million in India. Companies must also commit to setting up local manufacturing within three years, and the factory must have a localization rate of 25% by year 3 and 50% by year 5 of manufacturing.

If automakers agree to these commitments they will benefit from reduced import duties of 15% for cars priced at US$35,000 and above. This is a substantial reduction from the current import tax rates, which range between 70% to as much as 100% based on the vehicle’s value.

However, there’s one more caveat. These reduced import duties will only be applicable for a maximum of 8,000 EVs per year, up to a total of 40,000 EVs for each manufacturer, but only if their investment totals US$800 million. If their investment is less than that, but still above US$500 million, they will be allowed to import a lower number of EVs with the reduced duties, based on their level of investment and the value of the EVs being imported.

India’s Ministry of Commerce and Industry outlined the formula to calculate how many EVs can be imported.

Tesla is of course not specifically named in the new policy, but given that they had previously agreed to an investment of $500 million if the government moved to cut taxes on imported cars, this new policy is expected to allow them to make their long-anticipated entry into the Indian market.

And it appears Tesla knew this was coming, and has already been making preparations. Last year the company hired Anandhan as a Senior Supplier Industrialization Engineer. According to his LinkedIn profile, first spotted by Tesla Club India, his role involves support[ing] development of critical parts and assembly at India supply base, Involves Drivetrain & Propulsion, Chassis and Structural parts for BIW as well as for Energy Systems.”

You can read the full announcement from India’s Ministry of Commerce and Industry below.

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