As the general election approaches, the Modi government in India has finally decided to reduce import tariffs for electric car companies intending to set up factories locally, in order to attract international car manufacturers including Tesla.
According to a statement released by the Indian Ministry of Commerce and Industry on Friday, as long as companies commit to investing at least 41.5 billion rupees (approximately 500 million US dollars) within 3 years and produce electric vehicles in local factories, they can enjoy tax incentives. The statement mentions that imported electric cars priced above $35,000 will only be subject to a 15% tariff over 5 years. However, car companies committing to invest over 800 million US dollars can only import a maximum of 8,000 vehicles per year, totaling 40,000 electric cars.
Currently, India imposes a high tariff of 70% on imported cars below $40,000, and a staggering 100% tax on cars priced above $40,000.
For Tesla, which has been negotiating tariff reductions with India, this news is undoubtedly a positive development. Tesla's CEO has repeatedly complained that India's high car import tariffs are the main obstacle to selling electric cars in the country. Now, breaking into this emerging market with the largest population globally is particularly significant for Tesla, which has been struggling with slow growth. The Indian middle class, eager to purchase foreign electric cars, is expected to provide new support for Tesla's sales.
Last year, Tesla announced significant investments in India and plans to personally visit the country in 2024. He also sees potential in India for renewable energy generation and solid-state battery storage.
Investments from global manufacturers may accelerate India's transition to electric vehicles. Data shows that electric car sales in India accounted for only 2.3% of total sales last year. Although there is rapid growth in demand for electric motorcycles in the country, the low adoption rate of electric cars is due to weak infrastructure, limited charging facilities, and high prices.

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The premise is to first invest in building a factory in India.

India has announced a reduction in import tariffs on electric vehicles for specific car companies in order to attract external investments.