In a significant move aimed at propelling the growth of the Indian electric vehicle (EV) market, the government has introduced import duty concessions as part of its EV policy. Effective immediately, this policy alteration allows eligible companies to import up to 8,000 EVs annually, priced at $35,000 or higher, at a reduced tax rate of 15 percent.
This marks a substantial departure from the existing tax regime, which imposes rates of 70 percent or 100 percent on imported EVs, depending on their value. Moreover, the scheme permits the carryover of unutilised import limits from one year to the next. Key highlights of the EV scheme include provisions to limit the total duty foregone to lower levels, amounting to Rs 6,480 crore, reflecting the maximum duty foregone per applicant and the committed investment by the applicant. Furthermore, importers availing of these concessions are required to establish manufacturing plants in India with a minimum investment of Rs 4,150 crore (US$500 million) specifically for producing premium electric four-wheelers (e-4Ws). Integral to the policy is the emphasis on domestic manufacturing, mandating that approved plants commence operations within three years and achieve a minimum domestic value addition (DVA) of 25 percent within the same timeframe. Additionally, these facilities must attain a DVA of 50 percent within five years, underscoring the government’s commitment to fostering indigenous manufacturing capabilities and enhancing self-reliance in the EV sector.
This initiative aligns with the broader objective of promoting sustainable mobility and reducing dependence on fossil fuels, in line with global efforts to combat climate change. By incentivising EV adoption and domestic manufacturing, the government aims to bolster India’s position as a hub for green technologies while stimulating economic growth and job creation in the burgeoning EV ecosystem. The introduction of import duty concessions is expected to catalyse investments in EV manufacturing infrastructure, spur innovation, and accelerate the transition towards cleaner and greener transportation solutions. As the country marches towards a more sustainable future, initiatives like these play a pivotal role in driving the evolution of India’s automotive industry and fostering environmental stewardship on a national scale.
