Boost for Electric Vehicles: India Lowers Customs Duties

15 Mar 2024 , 03:27 PM

On March 15, the Centre declared that a plan to market India as a manufacturing destination for the production of the newest generation of electric vehicles (EVs) had been authorised. According to a statement from the Ministry of Commerce & Industry, “the policy is designed to attract investments in the e-vehicle space by reputable global EV manufacturers.”

The new regulation, which could support Tesla’s market entry plans, requires corporations to invest a minimum of ₹4,150 Crore in the nation and gives them three years to set up local manufacturing for EVs with at least 25% of the components supplied locally.

Businesses who fulfil these conditions will be able to import 8,000 electric vehicles annually at a 15% import duty on vehicles priced at $35,000 and more. Depending on the car’s worth, India taxes imported vehicles at a rate of between 70% or 100%.

According to a government statement, the action is anticipated to improve the EV ecosystem, give access to the newest technologies, and promote the Made in India campaign. Import duties on electric vehicles (EVs) are waived up to the annual PLI incentive of ₹6,484 Crore or the entity’s investment, whichever is less.

“We commend the Union Government for its progressive stance in granting approval for the e-vehicle policy, which is a crucial step in making India a global leader in the production of electric vehicles. With no maximum investment amount and a minimum investment requirement of ₹4,150 Crore, this policy lays forth a clear plan for drawing significant capital inflow into the industry.

The government’s commitment to promoting domestic production and innovation is demonstrated by the 3-year deadline for setting up manufacturing facilities and the objective to attain 50% domestic value addition within 5 years. Furthermore, allowing a restricted number of EV imports at lower customs duty rates is a calculated step to balance home production with global competitiveness by encouraging businesses to invest in local manufacturing.

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