Skip to content

Centre's New Policy to Boost EV Manufacturing, Lower Import Duty for Tesla

India's new policy lowers import duty on EVs, encouraging manufacturers to set up facilities in India. Will this pave the way for Tesla's entry into the country? #EV #Tesla #MakeInIndia

Centre's Policy to Promote EV Manufacturing

The Centre has approved a new policy to lower import duty on electric vehicles (EVs) for companies setting up manufacturing facilities in India, a move that could pave the way for Tesla's entry into the country.

Reduced Import Duty for EV Manufacturers

Under the scheme, import duty on vehicles with a cost, insurance, and freight (CIF) value of $35,000 or above will be reduced to 15% for five years for companies investing at least INR 4,150 Cr (about $500 Mn) in India for manufacturing facilities.

Positive Impact on Indian Economy

The Ministry of Heavy Industries stated that the policy will provide Indian consumers with access to the latest technology, boost the Make in India initiative, promote healthy competition among EV players, and reduce air pollution, particularly in cities.

Conditions for Manufacturers

Companies setting up manufacturing plants in India would have to start commercial production of EVs within three years and achieve 50% domestic value addition within five years.

Limitations on Import

While import duties have been reduced, the scheme limits the import of EVs to not more than 8,000 per year, with any remainder carried over to the following year.

Potential Entry of Tesla

The new policy is expected to clear the path for Tesla's entry into India. Elon Musk had criticized high import duties in 2021 but later showed interest in investing $2 Bn in India for setting up a local factory if import duty on its vehicles is reduced to 15% during the first two years. Tesla is also open to committing nearly $30 Bn in direct and indirect investments in India over the next five years.


The policy is seen as a significant step towards promoting EV manufacturing in India and attracting investments from global players like Tesla.