The Indian government said it had lowered import duty on battery electric vehicles (BEV), effective immediately, for companies planning to invest at least US$500m in local production within three years.
Companies which meet the requirements would be allowed to import 8,000 BEVs costing US$35,000 or more at a preferential import tariff rate of 15% compared with existing duty of 70% to 100% which is amongst the highest in the world.
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The tax cut was expected to attract new automakers to the country, including Tesla, BYD and other Chinese brands said to have lobbied the Indian government to help them establish a local foothold.
Tesla CEO Elon Musk visited India several times in the last year, including meeting prime minister Narendra Modi last June. He was said to have proposed making a $24,000 BEV. BYD also wants to build a BEV plant in India as does VinFast.
Strong economic growth drove the market to 5m units last year, overtaking Japan as the third largest after China and the US.
The BEV segment has yet to get going, however, with sales accounting for 1% of sales. The government has set an ambitious EV target of 30% of passenger vehicle sales by 2030.
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By GlobalDataIndian commerce minister Piyush Goyal said: “We invite global companies to come to India. I’m confident India will become a global hub for EV manufacturing, creating new jobs and improving trade”.
