Importing electric vehicles into India was previously subject to up to 110 per cent tax; now, that’s lowered to just 15 per cent. This initiative encourages big companies worldwide to invest in electric car production in India, helping its economy and supporting cleaner transport.
The New EV Policy
SPMEPCI (Scheme to Promote Manufacturing of Electric Passenger Cars in India) offers reduced import duties to companies that invest 500 million dollars or more in India for new EV manufacturing within the next three years. For our requirements, the existing factories are suitable for use.
Manufacturers can only receive these benefits by meeting certain requirements, including reaching a yearly turnover of Rs 2,500 crore by the second year, Rs 5,000 crore by the fourth year, and Rs 7,500 crore by the fifth year. Besides, by the second fiscal period, they should aim to achieve 25 per cent local value-addition, and by the end of year five, they must have increased it to 50 per cent.
Besides, a 15 per cent import duty is now applicable only to electric vehicles that cost more than 35,000 Dollars (about Rs 30 lakh). Each maker of electric vehicles that meets the criteria can import 8,000 units a year, and any unclaimed quantity will be added to next year’s quota. Rs 6,484 crore or the amount invested, whichever is a lower figure, represents the greatest gains from this duty reduction.
Research and development, equipment, and production are some of the costs that investments may incur. Up to 5 per cent of the investment can be spent on charging stations, and the rest (10 per cent) can be spent on land and factory buildings.
Tesla’s Potential Entry
While the policy looks favourable, given Tesla’s past requests to lower import duties, the company isn’t planning to set up manufacturing in India. Making Tesla cars locally could help the company pay less tax. Nevertheless, because Tesla is sending most of its cars to the United States, the new incentives likely won’t help them.
