India introduced a policy to lower the tariffs on imported EVs to attract global EV manufacturers to set up manufacturing facilities in the country. Still, despite a growing presence in the global EV market, China-based EV manufacturers may not benefit from India's latest policy.
India is looking to attract global companies, particularly Tesla, to invest in setting up EV plants by approving an EV policy in March. Companies investing a minimum of about US$500 million are eligible for lower basic customs duty on imported EVs.
However, Chinese companies may miss out on these benefits. A senior government official told Moneycontrol that India remains cautious about foreign investments from Beijing due to national security worries.
According to the report, the discounted import duty policy is tied to specific investment commitments. However, as EV projects from China-based EV manufacturers like BYD may not be cleared under India's current FDI policy, which requires prior approval before making investments, they are not eligible for the lowered duty on imported EVs.
On March 15, India's Ministry of Commerce and Industry unveiled a new EV policy, which cuts import taxes for EVs but only if brands meet specific local production requirements. These include a minimum investment of US$500 million, a set timeline for local manufacturing, and meeting a certain domestic value addition rate within a specified timeframe.
Additionally, India has set criteria for the EVs eligible for this import duty reduction. Only premium EVs valued above US$35,000 at CIF value qualify. There's also a yearly quota of 8,000 eligible EVs. The budget for these import duty reductions is capped at INR 64.84 billion (US$777 million), equivalent to India's Production-Linked Incentive (PLI) scheme for clean automobiles and auto components.
India's EV policy was primarily aimed at attracting global EV majors like Tesla. However, a planned visit by Tesla CEO Elon Musk to India was postponed over the weekend due to "very heavy obligations."
