The Indian government is revising its electric vehicle (EV) policy to attract more automakers, including those with existing manufacturing capabilities, rather than focusing solely on companies planning to establish new production plants. This move follows Tesla’s continued absence despite prolonged negotiations, with the company reportedly holding back due to India’s stringent localization and investment requirements.
The current policy, introduced in March 2024, offers reduced import duties of 15% (down from 100%) for up to 8,000 EVs annually. However, it mandates a $500 million investment and 50% localization within five years. The government initially designed the policy to entice Tesla into establishing a manufacturing base in India. Tesla CEO Elon Musk previously hinted at potential investments after discussions with Prime Minister Narendra Modi but has yet to act on these statements.
The revamped policy aims to include investments in existing factories producing internal combustion and hybrid vehicles, provided separate production lines are dedicated to EVs. Additional requirements include specific local sourcing thresholds and a minimum revenue target from EV sales to qualify under the scheme. Analysts view this as a significant step to align India’s EV ambitions with global automakers like Toyota and Hyundai, which have already expressed interest.
Industry experts have mixed reactions to the policy’s evolution. An official from India’s Ministry of Heavy Industries remarked, “This is a progressive step to bolster India’s position as an EV hub.” Meanwhile, skeptics highlight that Tesla’s absence reflects broader challenges, including high costs and regulatory hurdles. Fred Lambert, an EV industry commentator, stated, “While the policy is a crack in the door for companies like Tesla, the limitations on import caps and the demanding localization targets may still deter some players”.
The government plans to finalize the revised policy by March 2025, demonstrating India’s commitment to accelerating EV adoption and addressing gaps in its earlier strategy.
 policy to attract more automakers, including those with existing manufacturing capabilities, rather than focusing solely on companies planning to establish new production plants.){kind=link}