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.
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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”.
