Indian government is considering introducing a new electric vehicle policy that would slash import taxes for car companies that commit to some local manufacturing, which would help high-end EV makers like Tesla Inc. enter the ever-growing market. The new EV policy could allow carmakers to bring fully-built (CBU) electric vehicles to India at a reduced tax as low as 15%, compared to the current 100% that applies to cars which cost above $40,000 (INR 33.29 lakh).
Tesla is currently in the works of entering the Indian market, and the tax reduction could help the American company to testmarket their products before going all in. The tax will only be lowered given that carmakers agree to soon start work on manufacturing their products in India, promise to start sourcing components locally and provide bank guarantees towards any faults in their commitments.
“The government will also take guarantees from the companies towards creating an ecosystem for suppliers, with around 20% of parts being sourced locally in the first two years which would go up to 40% by the fourth year,” revealed a person in the know of the development.
What this means for local players
The lower import tax duty on high-end EVs like Tesla cars could prove to be a setback for mass-market car manufacturers in India that have already committed huge investments for manufacturing electric vehicles and their components in the country.
Tesla has previously hinted that its portfolio in India could be priced from Rs 20 lakh onwards. At this price point, buyers might gravitate towards a Tesla EV as against promising Indian electric cars like the Mahindra XUV400 and Tata Nexon.ev.
On the flipside, the new policy’s adoption could result in a drastic reduction in the prices of fully-imported EVs, not only benefiting Tesla, but also helping other luxury players bring their global EVs to India at a lower price.
