A steep duty drop could rev up India's EV market

There may be hope for a resolution in negotiations between American EV-maker Tesla and India’s government.

- 

On Wednesday, Mint reported that the government is considering slashing its import duty on electric vehicles (EVs). As opposed to the 70% import duty levied on cars priced below $40,000, a new national EV policy could lower that threshold to $25,000-35,000 and the tariff rate to 15-30% for this segment. At that band’s lower end, EVs imported as road-ready units would be at par with car assembly kits that face lower tariffs. There will be conditions, though: importers availing of the slashed rate will need to begin manufacturing in India over the next two-three years. If they fail to meet their end of the bargain, the Centre would claw back the import benefits extended. This seems a pragmatic middle path. By not eliminating the duty entirely, as Tesla has been arguing for, it would get some revenue and not make too drastic a shift, instead setting the stage for an experiment with space for recalibration either way. The basic idea, of course, is to get Tesla in.