New Policy Announced To Attract Global Auto Manufacturers To Make EVs In India

The Indian government on Monday announced a restructured policy designed to attract international automotive manufacturers to setup electric vehicle (EV) production facilities in the country through substantial import duty reductions. The Centre, approved a forward-looking scheme to promote the domestic manufacture of passenger cars, with a special focus on EVs, said a release by the ministry.

This initiative is aligned with he country's goals of achieving net zero by 2070, and encouraging sustainable mobility, driving economic growth, and reducing environmental impact.

EV Import Tariff Reduced

The revised framework permits foreign automakers to import EVs at a reduced tariff rate of 15 per cent, a significant decrease from the standard 70 per cent import duty currently imposed. 

This preferential treatment is contingent upon manufacturers committing to invest a minimum of $486 million in domestic EV manufacturing operations, according to an official statement from the Ministry of Heavy Industries, as quoted by news agency Reuters.

Mercedes, Volkswagen, Hyundai Show Interest

Several major automotive companies have expressed preliminary interest in the new policy framework, including German luxury manufacturer Mercedes Benz, Volkswagen Group and its subsidiary Skoda, as well as South Korean automakers Hyundai and Kia, a Union minister said during Monday's press conference.

However, EV maker Tesla, owned by Elon Musk appears to be taking a different approach. Officials indicated that the American EV manufacturer has not expressed interest in establishing production facilities in India, instead focusing its strategy on vehicle imports to serve the Indian market.

The scheme specifically targets passenger vehicle manufacturing with particular emphasis on EVs, reflecting the government's push toward environmentally friendly mobility solutions and reduced carbon emissions in the transportation sector.