India set to significantly reduce EV Import Duty from 110% to 15% Under new Policy

India set to significantly reduce EV Import Duty from 110% to 15% Under new Policy Featured Image

Author:
Jas Chellani

Published on:
February 21, 2025

Categories:
EV News & Trends

The government is planning to notify EV policies, which was announced last year in March. The government will be also introducing new investment rules as the new policy may generate sales of Rs 2,500 crore by the second year of its implementation, as confirmed by news agencies. 

Policy Guidelines

These new formulated policies will give the access to EV companies to manufacture their assembly plants within their existing factories, as per some confirmed reports. However, the center has imposed certain conditions that the required investment of Rs 4,150 crores (Approx 500 Million) have to come from new capital infusion, which excludes prior investments and costs related to land.

Thus it is compulsory for the companies to fulfill these conditions and only then they will qualify for reduced import duties of 15%, which is lower than the current tariff of 110%. 

Auto manufacturers will get 120 days to apply, with the policy allowing annual imports of 8,000 luxury EVs, which are priced above 35000$, at less rates. 

Companies are required to establish operational manufacturing units in the span of three years and have achieved 25% domestic value initially, increasing to 50% in the coming five years of being approved by the ministry. 

These policy rules which are made through extensive industry suggestions are in approval stage from Heavy industries Minister H.D. Kumaraswamy. 

These new regulations have given turnover targets, generating Rs 2,500 crore by the second year, Rs 5,000 crore by the fourth year and Rs 7,500 Crore by the fifth year from the start of the manufacturing of EV cars. 

Many big Auto players like Hyundai and Volkswagen group shared their views during the government discussions on the new investment rules, it is unlikely as their investment commitment is uncertain. This policy is also formulated by keeping Tesla’s entry in mind, however it has yet to communicate with the government. 

Tesla has also confirmed to start their operations soon in India and have finalised Delhi and Mumbai for their retail outlets. The US manufacturer is thinking about imports from the Berlin plant to start selling in India. 

 

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