India Reduces EV Import Duty to 15% to Attract Carmakers

In a groundbreaking policy revision to strengthen its Electric Vehicle (EV) ecosystem, India is implementing a restructured framework with large incentives for global automakers. The easement is that import duties on EVs will only be 15% instead of the current 70%, subject to an investment clause.

A Game Changer for Foreign EV Manufacturers

With the new and improved policy release on 2nd June, 2025, foreign automakers will be incentivised to open manufacturing facilities with an allowance from the Ministry of Heavy Industries, around $486 million (approx. ₹4,000 crore), towards domestic EV power.

The government wants this to catapult India's position as a significant global EV manufacturing hub, sustain mobility, and kickstart thousands of jobs domestically in addition to reaching net-zero by 2070.

Who is Interested?

There is positive early feedback regarding the new incentives package. Key players, including Mercedes-Benz, Volkswagen Group (Skoda), Hyundai, Kia, have all shown interest in the new framework, a Union minister told reporters after a press briefing.

These companies see the growth of India's nascent EV market as a timely chance for expansion, especially in light of the more investor-friendly policy landscape and the increasing demand for cleaner modes of transport.

Examining Tesla's Distinct Approach

Interestingly, the world's largest EV manufacturer has not taken up the local manufacturing requirements necessary to commercialize their products. Instead, it seems that Elon Musk's company is primarily focused on establishing a small presence in India by importing vehicles to better understand the country's market before thinking about operations to produce locally at present.

What It Could Mean for The Future of EVs in India

By reducing import duties in exchange for local investment, India is well poised for a very dynamic transition in its automotive landscape. There is a strong likelihood that the new policy will not only attract international players but also stimulate local innovation, accelerate EV adoption, and put India on the map as a player in the global movement towards clean mobility.

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