Centre approves game-changing EV policy: Tesla arrival imminent, here’s how

India’s electric vehicle (EV) sector received a major shot in the arm with the central government’s approval of a much-anticipated policy package.The new e-vehicle policy approved by the centre will attract investments from renowned global EV manufacturers. Now, let’s take a quick look at the key points of this new EV policy and how it could pave the way for Tesla to enter the Indian market, although certain conditions must be met first.
India’s new EV policy – Key highlights
Key highlights of the policy include a minimum investment requirement of Rs 4,150 crore (approximately USD 500 million), with no ceiling on the maximum investment amount.
Companies establishing manufacturing facilities for EVs will be granted a three-year window to set up operations in India and to begin production of EVs. Furthermore, within a maximum period of five years, these manufacturers are mandated to achieve a 50 percent domestic value addition (DVA) during the manufacturing process. The policy also says that a localisation level of 25 percent must be achieved by the third year.

Import duty slashed to 15 percent paving way for Tesla’s arrival
For the global players who intend to set up facilities in India, much like Elon Musk-led Tesla, limited imports of EVs will be permitted at a lower customs duty rate of 15 percent for vehicles with a minimum CIF (cost, insurance, freight) value of USD 35,000. At percent, an import duty of 70 percent is levied on the electric vehicles falling under this category.
However, this concessional rate will be applicable only if the manufacturer establishes manufacturing facilities in India within a three-year timeframe with an investment of USD 500 million. Speaking of Tesla, the US-based marque has been asking for a reduction in import taxes for a while now. Recently, another company VinFast from Vietnam also said they want the import taxes to be lower.
The amount of duty not paid on all the EVs allowed to be brought into the country will be limited to the money invested or Rs 6,484 crore, whichever is less. Also, no more than 40,000 EVs can be brought in each year, following specific rules. To make sure that companies follow the rules of the scheme, the manufacturers will have to provide a bank guarantee equal to the duty not paid, which will be used if they don’t meet the specified criteria for domestic value addition (DVA) and investment.