After months of lobbying for Tesla to set up shop in India, the country’s government recently announced a new electric vehicle (EV) policy that will support the entry of the American EV maker as well as other interested companies.
Under the new policy, import taxes will be lowered on certain EVs produced by carmakers that commit to invest at least USD500 million (about RM2.35 billion). Additionally, they will also be granted a three-year period to establish local manufacturing facilities for electric vehicles (EVs) and must ensure that at least 25% of the components are procured within India by the third year – this goes up to 50% by the fifth year.
Companies that meet these requirements will be allowed to import up to 8,000 EVs with a minimum cost, insurance, and freight (CIF) value of USD35,000 (about RM165k) or more a year at a lower tax rate of 15%. This is a considerable advantage as taxes on imported cars in India range from 70% to 100% depending on their value.
EV imports at the lower tax rate will be allowed for a maximum of five years. The duty foregone would be limited to the investment made by the company or around USD800 million (about RM3.8 billion), whichever is lower, reports Reuters.
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