India explores tax cuts to attract Tesla and other EV companies

Important Takeaways

  • India is considering up to a five-year tax cut on completely built electric vehicles (EVs) to attract international automakers, including Tesla.
  • The move aligns with India's goals of increasing the share of manufacturing in GDP, creating employment, and addressing challenges in the early-stage EV market.


No edit has been made to this article since it was first published.


India is considering tax cuts on the import of fully built electric vehicles (EVs) for a period of up to five years. The move aims to boost the country's EV market and attract global automakers such as Tesla.

The government is in the process of formulating an EV policy to allow international car manufacturers to import battery-powered vehicles at concessional duty rates, provided they commit to manufacturing EVs in India in the future.

Tesla has been in ongoing discussions with the Indian government, seeking duty cuts on EV imports. The company wants to reduce the existing duty rates, which currently range from 70% to 100%. However, a final decision on the policy specifics is still pending, and neither the heavy industries nor commerce ministries have commented on the matter.

Indian Trade Minister Piyush Goyal's recent visit to Tesla's factory in Fremont, California, coincided with discussions around Tesla's potential investment in the Indian market. Goyal expressed pride in the increasing importance of Indian auto component suppliers in Tesla's EV supply chain.

Tesla's interest in India's auto market aligns with the country's goals of increasing manufacturing's share in GDP and creating employment opportunities.

India's electric car market is in its early stages and accounts for only 1.3% of total passenger vehicles sold in FY23. However, this is a significant increase compared to the 0.6% share of EV cars in total passenger cars sold in FY22. The overall domestic EV market's compounded annual growth rate (CAGR) is expected to be around 49%, which is another factor international EV players will consider when entering the Indian market.

High costs, limited options, and inadequate charging infrastructure have hindered widespread EV adoption. Besides considering tax cuts for EVs, India is exploring reduced import taxes on certain EVs from the UK as part of negotiations for a free-trade deal with Britain. These initiatives demonstrate the government's commitment to accelerating cleaner transport adoption in a country dealing with severe air pollution.

The move towards a more favourable EV policy reflects India's determination to position itself as a major global electric vehicle (EV) market hub.


Date & time of posting: 14 November 2023, 06:05 PM IST

Posted by: Matter5 News Team

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