Government to launch EV manufacturing policy with reduced duties to attract international producers.

India is preparing to launch applications for its main policy that provides reduced import duties to international electric vehicle manufacturers in return for producing in India, sources familiar with the situation stated.

The policy announced in March 2024 proposes to reduce duty to 15 percent on imported electric cars costing $35,000 or more if they invest a minimum of ₹4,150 crore, approximately $500 million, to establish a local manufacturing facility within three years. A maximum of 8,000 vehicles per year can be brought in at this lowered rate. Applications for this could start as soon as this month and last until March 15 of next year, according to sources familiar with the conversations who requested anonymity.

The third-largest economy in Asia is aiming to attract electric vehicle manufacturers such as Tesla Inc., led by Elon Musk, which is preparing to sell its cars in India after years of criticism regarding the country’s high tariff policies. India remains a key market for EVs, even as demand softens in other regions globally. If the new policy attracts major industry players, it will heighten competition for local car manufacturers that currently lead the EV market.

Although the overall framework aligns with last year’s announcements, sources indicated that the Narendra Modi government has now imposed stricter conditions to eliminate non-serious participants. India has heightened financial criteria, requiring a minimum revenue of ₹5,000 crore in the fourth year and ₹7,500 crore in the fifth year for any candidate accepted under the policy. Those who do not meet expectations will incur a fine of up to 3 percent on the revenue shortfall.

India’s Ministry of Heavy Industries did not promptly reply to an email requesting comments.