India cuts import taxes on EVs in win for Tesla’s entry plans

India will reduce import taxes on certain electric vehicles for companies investing at least $500 million and establishing a local manufacturing facility within three years. This change in policy could benefit Tesla’s plans to enter the South Asian market. Companies must invest $500 million and have three years to set up local manufacturing for EVs with at least 25% of components sourced domestically. Firms meeting these requirements can import 8,000 EVs a year at a reduced import duty of 15% for cars costing $35,000 and above. India currently taxes imported cars at 70%-100% depending on their value. This shift is likely to pave the way for Tesla’s entry into India, aligning with the country’s goal to increase EV adoption and reduce oil imports. The Ministry of Heavy Industries stated that this policy will benefit Indian consumers, promote the Make in India initiative, strengthen the EV ecosystem, reduce air pollution, and have a positive impact on health and the environment. The Commerce and Industry Ministry also mentioned that firms investing at least $800 million can import up to 40,000 EVs. Tesla has been exploring the Indian market for years and plans to initially import EVs from China’s Shanghai before establishing local manufacturing. BofA analysts predict Tesla will introduce a sub-$25,000 model in India to compete with local manufacturers like Tata Motors and Hyundai. India’s average car price is under $10,000, making it a potential manufacturing hub for Tesla to export vehicles to Southeast Asia. Tesla, along with other companies like VinFast and Lotus Cars, is looking to expand its presence in the Indian market despite challenges from local manufacturers.