The Government of India is developing an electric vehicle policy that would let foreign automakers import battery-powered cars at reduced tax rates provided they agree to eventually construct them in India.
This is being done in an effort to lure companies like Tesla Inc.
Sources that spoke to Bloomberg stated that a final decision regarding the policy's parameters has not yet been made. Emails for response from the heavy industries and commerce ministries in India were not immediately answered to Bloomberg.
Tesla, the Austin, Texas-based EV manufacturer had requested a reduction in import duties on electric vehicles in 2021. It hoped that the rates, which range from 70 per cent to 100 per cent depending on the import value of the vehicle, would be lowered to 40 per cent.
Elon Musk, the CEO of Tesla, is scheduled to meet with India's Commerce and Industry Minister Piyush Goyal later this week to talk about the company's intentions to establish a factory in India. Goyal is in San Francisco for the Asia-Pacific Economic Cooperation and the Indo-Pacific Economic Framework ministerial meetings.
As the India's middle class grows, so does the desire for electric vehicles, making this one of the world's most promising auto markets for Tesla.
In addition to creating jobs, Tesla's investment would support the Indian government's efforts to raise the manufacturing sector's percentage of the GDP.
Only 1.3 per cent of all passenger vehicles sold in India last year were electric cars (EVs), indicating that the country's electric car business is still in its infancy, according to BloombergNEF.
Shortage of options, high automobile costs, and a shortage of charging facilities have all hindered the country's adoption of EVs.
In a nation where the air is currently the most polluted in the world, opening up the EV market could hasten the adoption of cleaner transportation. In order to increase local EV production, the government introduced a $3.1 billion incentive programme in 2021.