India to Welcome Tesla by Cutting EVs Import Taxes

In a bold move India is cutting import taxes on EVs (electric vehicles) to let Tesla enter the country without compromising on profits or raising prices for the end customers.

However, this is not going to work for all companies and all types of EVs, it looks like a special treatment for Tesla to enter India in a strategic partnership with the government as the company is looking forward to investing over $500 million in the country.

It is reported by various media outlets that any company committing a $500 million or more investment in the country will surely be able to avail tax-free or lower taxes for their EV imports.

The new policy “will provide Indian consumers with access to latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment,” the Ministry of Heavy Industries said in a statement.

Besides investing $500 million, companies also need to set up fully functional local manufacturing facilities in 3 years generating hundreds and thousands of new jobs for Indian youth, and EV companies also have to source at least 25% of the components domestically.

Any company complying with these options will be able to enter India with a lower tax rate and import up to 8,000 EVs every year with a reduced import duty of 15% on EVs costing more $35K or more. This is a dream coming true for EVs as India’s current tax rate is a whopping 70% to 100% for cars with any price range.

India looking forward to going at least 30% electric by 2030 to reduce oil dependency and Tesla was also asking India to reduce the tax so the Elon Musk-led EV company could start operations in the country.

This move will help 10s of other companies alongside Tesla to enter a big market and leverage the reduced tax policy.