Lower duties likely for EVS priced up to $35k

Import duty may be slashed to 15-30% with caveat on local manufacturing

- Alisha Sachdev

Foreign electric vehicle (EV) makers such as Tesla Inc. seeking an Indian foothold may have relief at hand, with the government considering lower import duties for EVs up to a certain price level, two people familiar with the discussions said.

All completely built-up (CBUs) vehicles priced below $40,000 now face an import duty of 70%, and a new national EV policy may slash it to 15-30% for EVs priced up to $25,000-35,000, the people said on the condition of anonymity. At 15% duty, these CBUs will be on par with the import duty for CKD (completely knocked down) cars. This will also come with the caveat that they begin local manufacturing in the next two to three years and a clause to claw back the duty sop if they fail to do so.

Elon Musk’s Tesla recently made a second push to reduce EV duties in India as it scouts for new markets amid a slowdown in the West and growing competition from local players in China. The American carmaker is targeting customers at the top end of India’s growing mass-premium segment of EVs and does not want to be a luxury player competing for a small set of wealthy buyers, the people said. India’s electric car market is close to doubling sales this year, up from nearly 33,000 last year.