Foreign car firms eye trade deals for EV tariff reduction

Companies shift focus as EV import policy announced last March yet to see rules in place

- Ayaan Kartik & Nehal Chaliawala

In March 2024, foreign carmakers took note when India proposed low-duty imports for a few thousand electric cars, if they promised to invest a specific amount here. But with the Centre yet to finalize the scheme's guidelines, manufacturers have shifted their sights to expected duty reductions in free trade agreements (FTAs) under discussion, three industry executives said.

The Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), dubbed the "Tesla Policy", was seen as part of New Delhi's attempt to attract the US carmaker after its CEO Elon Musk publicly criticized the country's high import duties on automobiles.

Under the scheme, approved car makers were to be allowed to import up to 8,000 electric vehicles (EVs) a year at 15% duty against the usual 70-110% tariff on the import of fully made cars, which are called completely built units (CBUs). The concession was contingent upon minimum investments worth ₹4,150 crore. Tesla, the Volkswagen Group, Hyundai Motor India Ltd, Toyota Kirloskar and Vietnam's Vinfast were among entities who were previously reported to be interested in the scheme.