India Finalises EV Policy Amid Tesla’s Reluctance To Commit To Local Production

India’s new EV policy offers tax cuts for local production; Tesla holds back

India has finalised a long-anticipated electric vehicle policy aimed at incentivising global automakers to invest in local production, even as Tesla appears hesitant to commit to manufacturing within the country. According to HD Kumaraswamy, India’s Minister for Heavy Industries, Tesla has shown no current interest in establishing domestic production facilities, despite the policy being initially crafted with the U.S.-based EV pioneer in mind.

The newly announced policy offers substantial tax breaks to foreign carmakers willing to make significant investments in India’s EV infrastructure. Specifically, companies that commit to investing at least $500 million in Indian EV manufacturing will be eligible to import a limited number of electric vehicles at a reduced import duty of 15%, down from the existing 70%.

Qualifying manufacturers are expected to begin production within three years and adhere to local content requirements, promoting domestic supply chains. The initiative is part of India’s broader ambition to electrify 30% of its vehicle fleet by 2030. Currently, EVs comprise only about 2.5% of the nation’s car sales, with homegrown automakers like Tata Motors and Mahindra & Mahindra leading the market.

While Tesla has maintained that high import duties have been a deterrent, it has yet to follow through on local investment. In contrast, global companies such as Mercedes-Benz, Volkswagen, Hyundai and Kia have expressed interest in participating in India’s evolving EV landscape.

The policy also allows limited investment in associated technologies like charging infrastructure and research, addressing some of the critical barriers to EV adoption in India, particularly the shortage of fast-charging stations.

Despite Tesla’s current stance, the Indian government remains committed to fostering a competitive and sustainable EV ecosystem, leveraging both foreign and domestic participation.