In the dynamic landscape of India’s emerging electric vehicle (EV) sector, a seismic shift is on the horizon. Government sources suggest that Tesla and other EV giants might soon need to embrace ‘Make in India’ to capitalize on the enticing incentives embedded in the prospective EV policy.
Embracing Local Manufacturing: The Heart of the EV Policy
Insiders reveal that the proposed EV policy is set to make local manufacturing a prerequisite, thereby steering companies away from mere assembly operations in India. “The policy is designed to ensure adequate manufacturing footprint in India; without it, the essence of ‘Make in India’ will be compromised,” a source stressed.
Import Tax Slashes: A Game-Changer for EV Companies
As part of this visionary policy, the Indian government contemplates significant import tax reductions for companies committing to local manufacturing. Reports suggest that automakers may enjoy reduced import taxes, potentially as low as 15 percent, for fully-built EVs. This is a stark contrast to the existing 100 percent tax for cars exceeding $40,000 and 70 percent for others.
Special Considerations for Global Players
In a bid to accommodate global players like Tesla, the government may permit the import of components from select Chinese suppliers on a case-to-case basis. Drawing parallels with Apple’s case, preliminary clearances were granted to Chinese suppliers, fostering joint ventures with Indian companies for domestic smartphone manufacturing.
Driving Sustainability: India’s EV Incentive Endeavor
Prime Minister Narendra Modi, in a September interview with Moneycontrol, highlighted the government’s commitment to fostering the EV industry for sustainable development. Various incentives, including production-linked schemes and a reduced GST of 5 percent on EVs, underscore India’s ambition to curtail carbon emissions.
State-Level Gambit: Incentives Beyond the Central Framework
Recognizing the pivotal role of states in propelling the EV revolution, India is banking on state-level incentives to attract behemoths like Tesla. The expectation is that states may sweeten the pot with additional perks, supplementing the central government’s policies.
Regional Rivalry: States Vying for Tesla’s Attention
Following initial talks with Tesla, several states, including Gujarat, Maharashtra, and Karnataka, are actively competing to host Tesla’s operations. Each state promotes its unique incentives, with Gujarat reportedly maintaining open channels with Tesla and a potential announcement slated for the Vibrant Gujarat Global Summit in January.
Diverse State Incentives
States like Gujarat and Tamil Nadu already boast robust ecosystems for EVs and exports. Gujarat offers substantial subsidies, while Tamil Nadu goes a step further with a 100 percent reimbursement of state GST on EVs for 15 years, enticing manufacturers to set up shop within their borders.
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