In a strategic move set to redefine India’s electric vehicle landscape, the Indian government is preparing to implement a comprehensive electric vehicle (EV) policy that significantly slashes import duties on EVs. The current import tariff of 110% will be lowered to 15%, creating a more accessible gateway for leading international EV makers such as Tesla and General Motors. To leverage these revised rates, interested manufacturers will need to apply and meet designated conditions within a 120-day timeframe from the policy’s launch.
Binding Investment Commitments for Market Entry
To ensure meaningful participation in the Indian EV ecosystem, the policy mandates a minimum investment of ₹4,150 crore from manufacturers looking to benefit from the relaxed import duties. This financial commitment must be allocated toward the creation of new production and assembly infrastructure, explicitly excluding expenditures related to land, buildings, or previously made capital investments. While companies may incorporate these operations into existing facilities, they are required to inject new capital specifically into their EV manufacturing capacities in India.
Performance-Based Milestones to Drive Accountability
The revised framework includes a clear roadmap for growth through revenue-based milestones. Manufacturers will be expected to achieve a turnover of ₹2,500 crore by the end of their second year in India. This target will escalate to ₹5,000 crore in the fourth year and reach ₹7,500 crore by the fifth year. Furthermore, companies must initiate domestic production within three years and gradually increase their local value addition starting with 25% in year three and rising to 50% by year five. These benchmarks are crafted to ensure lasting investment and sustained economic impact.
Making Premium Electric Vehicles Attainable
One of the standout elements of the new policy is its focus on enhancing affordability for premium EVs. Under the proposed guidelines, manufacturers will be allowed to import up to 8,000 high-end electric vehicles per year at the reduced duty rate. These vehicles must have a minimum invoice value of $35,000, which translates to around ₹30.35 lakh. Any imports beyond this quota will remain subject to the existing 110% import duty. This move seeks to strike a balance between enabling consumer access to premium technology and protecting domestic manufacturing interests.
Global Manufacturers Eye India’s Expanding EV Horizon
This new direction is expected to catalyze the long-awaited entry of international brands like Tesla into the Indian automotive market. With the cost advantage created by reduced duties, these global players will be better positioned to offer competitive pricing. The policy shift is also projected to encourage other global EV leaders to set up operations in India, with companies like BYD, which already has a presence, likely to benefit from the streamlined import structure and increased demand.
Energizing Domestic Production and Supply Chains
Beyond facilitating imports, the policy has been structured to fuel local manufacturing. By requiring significant investment and local sourcing targets, the government is promoting industrial growth within India. This emphasis is expected to generate employment, stimulate ancillary industries, and increase demand for local suppliers of EV components and materials, thereby nurturing a self-sufficient EV ecosystem that complements global collaboration.
Accelerating India’s Transition to Clean Mobility
The introduction of this EV policy represents a critical leap toward achieving India’s broader sustainability goals. By focusing on clean mobility solutions and reducing reliance on fossil fuels, the government is aligning national priorities with global environmental objectives. This initiative supports India’s ambition to become a major force in the global electric vehicle revolution and reinforces its commitment to long-term climate action.
Redefining the Automotive Future with Bold Reforms
The upcoming EV import policy is poised to reshape the contours of India’s automotive sector. By combining significant import duty cuts with strict investment, localization, and revenue milestones, the government is crafting an ecosystem that supports innovation, economic growth, and environmental consciousness. This forward-thinking reform not only opens doors for international manufacturers but also lays a strong foundation for a cleaner, more dynamic future in Indian mobility.