The Indian Government is planning to reduce import duty on Electric Vehicles (EVs). This may be in result that Tesla’s Entry Make Electric Cars Cheaper in India as there is more race in EV Sector.
However, domestic car manufacturers wanted this change to be delayed for 4 years. But PM Narendra Modi’s government is prioritizing a trade deal with the US, which includes cutting EV import taxes.
Government’s Plan to Cut EV Import Duty
Indian carmakers like Tata and Mahindra demanded no changes in EV import duty until 2029, after which they wanted it reduced from 100% to 30%. But the government is rejecting this proposal and may soon lower import tariffs. Officials say this will be a key part of the proposed India-US trade deal.
India-US Trade Deal Impact
A government official said: “We’ve given the auto industry enough protection—now it’s time to open up. We plan to significantly cut EV import duties.”.
However, the exact rate of duty cuts is still unclear as negotiations with the US continue.
Who will benefit after reduce import duty on EVs
If India cuts import duty soon, Tesla will gain the most. The company has already planned to open showrooms in Mumbai and Delhi.
Tesla CEO Elon Musk has long wanted to sell EVs in India, but high import taxes made it difficult.
Effect India’s EV Market
This decision could hurt Indian automakers like Tata Motors and Mahindra, who have heavily invested in India’s EV market. Cheaper imported EVs may affect their sales.
- In 2024, only 2.5% of 4.3 million cars sold in India were EVs. The government aims to increase this to 30% by 2030.
- Indian automakers said they could accept some duty cuts on petrol cars, but reducing EV tariffs too soon could hurt their investments.
- Their investments are linked to the PLI (Production Linked Incentive) scheme, which runs till 2029. If cheaper imported EVs arrive early, Indian companies may struggle to compete.
Will EVs Become Cheaper Soon in India?
The government will take a final decision after talks with the US. However, signs suggest EV import duty may drop soon, making India’s EV market more competitive.