India Explores Drastic Cut In Import Duties To Entice Tesla, Other Automakers For Local Production And Sourcing

The Indian government is considering a move to reduce import duties on fully-assembled electric vehicles (EVs) in the early stages of their production.

The move is expected to promote domestic manufacturing and bolster the EV industry in the country, as reported by The Economic Times.

Under this potential policy, advanced EV manufacturers such as Tesla could receive reduced import duties, if they commit to manufacturing their vehicles in India and increase their use of locally sourced components.

According to insiders, import duties on electric cars may drop significantly, potentially decreasing from 100 per cent to as low as 15 per cent.

To benefit from these reduced duties, companies would need to meet specific localisation requirements.

The government would also require assurances from these manufacturers to build a local supplier network, starting with sourcing about 20 per cent of parts locally within the first two years and increasing it to 40 per cent by the fourth year.

If this policy is implemented, it could encourage companies like Tesla, BMW, and Audi to expand their electric vehicle plans in India.

Previously, discussions between Tesla and Indian authorities stalled due to import tax issues.

However, Tesla has expressed renewed interest in India, proposing a manufacturing base within the country, aligning with India's push for local EV production.