Huge EV Policy Shift: India Slashes Import Duty from 110 Percent to 15 Percent

Published ByChhavi

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2025-02-21

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Huge EV Policy Shift: India Slashes Import Duty from 110 Percent to 15 Percent

The import duties will be lowered from 110% to 15% for premium EVs over $35,000. OEMs must invest Rs. 4,150 crore and meet production targets. OEMs must set up plants in 3 years with 50% local value addition in 5 years. Tesla is set to enter India with recent job postings.

The Indian government is planning to announce a new electric vehicle (EV) policy aimed to encouraging global EV manufacturers (including Tesla) to invest in India by significantly lowering import duties. The framework, originally proposed in March last year, suggests reducing import tariffs for premium EVs priced over $35,000 from 110 percent to 15 percent. However, OEMs will need to meet certain investment and production requirements.

To take advantage of the lower import duty, EV manufacturers must make an investment of a minimum of Rs 4,150 crores in the country. It is important to note that this total investment will not include expenses related to land acquisition, construction or past expenditures. Furthermore, OEMs will be required to achieve a turnover of Rs 2,500 crores by the second year. These turnover figures will gradually increase to Rs 5,000 crore by the fourth year and Rs 7,500 crore by the fifth year.

EV manufacturers that meet the above-mentioned criteria must submit their applications within 120 days of the official announcement of the new EV policy. Approved applicants will be permitted to import up to 8,000 premium electric cars per annum at the reduced duty rate. Under the new EV policy, it will be mandatory for OEMs to set up local manufacturing facilities within three years and achieve 25 percent domestic value addition. This value requirement will be increased to 50 percent within five years.

The American EV manufacturer, Tesla is expected to be the first beneficiary of the new policy, as the company recently posted several job openings in India, indicating its imminent entry into the Indian automobile market. Elon Musk and Prime Minister Narendra Modi recently met at the Blair House in the United States of America. As per media reports, Musk requested concessions and lower tariffs on imported EVs.

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Chhavi

Sub-Editor

Chhavi Kaushik is a seasoned content writer with over a decade of experience, beginning her career in 2010. Her fascination with automobiles led her to the industry in 2014. As a freelancer, She has contributed to some of the most reputed online automotive publications, consistently delivering fresh updates on the latest automotive events, product launches, car reviews, and critical industry insights.

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