Govt. may reduce import duty on green cars to 15%, but there's a catch

The government will also take guarantees from the companies towards creating an ecosystem for suppliers.

According to a media report, the government of India may create a policy for technologically sophisticated vehicle manufacturers like Tesla. In a bid to promote local manufacturing, the government could reduce the import duty on green cars.

Reports suggest that import duty on green cars may be reduced from 100% to 15% if the carmakers agree to manufacture their vehicles in India. The government will also take guarantees from the companies towards creating an ecosystem for suppliers, with around 20% of parts being sourced locally in the first 2 years and up to 40% by the fourth year.

The current customs duty policy does not differentiate between electric cars and ICE-powered vehicles. Hence, brands like Tesla, BMW and Audi want EVs to be categorized separately from luxury cars.

Tesla has been in talks with the Indian government seeking tax benefits. The negotiations hit a roadblock in 2021 when the government insisted on committing to local manufacturing. Renewed talks were held in 2023 after the EV maker shared plans to set up a manufacturing base.

Source: ET Auto