Tesla’s entry into India and other electric vehicle (EV) manufacturers could be facilitated, as the country announced a new initiative that seeks to offer a waiver on the high import tariffs that until now have been a significant hurdle. However, this openness comes with certain conditions.
Considered the world’s largest automotive market, where Tesla has yet to establish operations, India has been a key target for the maker of electric vehicle . Despite years of negotiations to find a solution to the high import tariffs on electric vehicles, no concrete agreement had been reached until now.
India’s electric vehicle import plan
Since 2021, it seemed that Tesla and the Indian government were close to reaching an agreement, but negotiations did not work out. Tesla has expressed a desire to follow its usual model of importing vehicles from its foreign factories and then expanding into the Indian market through service centers and Superchargers, a strategy hampered by high import tariffs.
For its part, the Indian government has pressured Tesla to set up a factory in the country. However, it appears that significant progress towards a compromise has finally been made.
Last year, Tesla CEO Elon Musk met with Prime Minister Narendra Modi in the United States and after the meeting, Musk announced that Tesla would make investments in India “as soon as humanly possible.”
Importantly, the government has launched a program that would facilitate this agreement, according to a press release, which seeks to promote India as a manufacturing destination for state-of-the-art electric vehicles. This scheme is intended to attract investment in the EV sector by recognized global manufacturers.
Under this new scheme, EV manufacturers will be able to benefit from import tariffs reduced to 15% for vehicles valued at “USD 35,000 or more for a total of 5 years”, but they must meet three main requirements:
- Make a minimum investment of Rs 4150 Cr (~500 million USD).
- Establish an EV manufacturing plant in India within 3 years, reaching a localization level of 25% in the third year and 50% in the fifth year.
- Manufacturers entering into this agreement will be able to import a total of 40,000 EVs at reduced rates, with a limit of 8,000 units per year.
Agreement for Tesla electric vehicles in India
Recent reports indicate that Tesla and the Indian government are close to closing a deal that would include building its next low-cost electric vehicle in the country. Tesla has hinted that it may announce a new location for its factory before the end of the year.
The opening of India to Tesla and other EV manufacturers through this new scheme represents a significant step towards the adoption of clean and sustainable technologies in the country. This move not only benefits the companies involved, but also promises to accelerate India’s transition to a low-carbon economy by encouraging innovation and the development of green infrastructure.
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Source: electrek.co
Photos: shutterstock
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