Mint Primer | Tesla at ₹40 lakh: Will EVs now come roaring in?

livemint.com:

₹29 lakh) from the current 70-110% to 15% for five years but comes with a number of caveats. The reduced tariff is valid only for 8,000 cars per year and can be availed only if companies make an investment of ₹4,150 crore or $500 million towards setting up a factory within three years. There is also a clause on domestic value addition –30% domestic value addition within three years going up to 50% by the fifth year.

The duty foregone on the import of vehicles is limited to the investment made or ₹6,484 crore (whichever is lower). Tesla has been complaining about India’s high import duty tariff regime and lobbying for a time-bound relaxation for it to test the market. The policy allows for that provided Elon Musk is ready to commit to making significant investments in India—a key demand from the government.

The policy satisfies both sides. With its existing portfolio, Tesla is unlikely to achieve significant volumes in India to justify setting up a factory but it is planning to develop an affordable platform for a $25,000 ( ₹21 lakh) car for emerging markets using India as a hub. This policy is tailormade for that strategy.

Chinese firms led by BYD, which overtook Tesla as the global leader in EVs in 2023, are looking closely at India. The policy makes no mention of it but though FDI in automobiles is under the automatic route, any investment from China requires an approval from the Ministry of Home Affairs. With that in place, Chinese firms do not stand to benefit from this policy.