Context

India will lower import taxes on certain electric vehicles for companies committing to invest at least USD 500 million and setting up a local manufacturing facility within three years, a policy shift that could potentially bolster Tesla’s plans to enter the South Asian market.

Impact of the move

• India currently levies a tax of 70% to 100% on imported cars depending on their value. The policy change is likely going to pave the way for Tesla to enter India.
• The move also aligns with India’s goal to boost the adoption of EVs and reduce its dependence on oil imports, with the country setting a target of achieving 30% electric car sales by 2030.
• The new policy will:
  • provide Indian consumers with access to latest technology
  • boost the Make in India initiative
  • strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude oil, lower trade deficit, reduce air pollution, particularly in cities