New Delhi
India is working on a new electric vehicle policy that would slash import taxes for automakers that commit to some local manufacturing, following a proposal by Tesla which is considering entering the domestic market, people with direct knowledge said. The policy being considered could allow automakers to import fully-built EVs into India at a reduced tax as low as 15%, compared to the current 100% that applies to cars which cost above $40,000 and 70% for the rest, said two of the sources, including a senior Indian government official. Tesla’s best-selling Model Y, for example, starts at $47,740 in the U.S. before tax credits. If such a policy is adopted, it could amount to a drastic reduction in the cost of imported EVs that local carmakers have been keen to avoid. It could also open the door for global automakers, beyond Tesla, to tap the world’s third-largest car market where sales of EVs are less than 2% of total car sales, but growing rapidly. Shares of Tata Motors, India’s largest electric car manufacturer, fell nearly 3%, while rival Mahindra and Mahindra dropped over 2%, dragging the benchmark auto index to an intra-day low with losses of 1.1%. New Delhi is going to move slowly in considering the policy proposal as any lowering of taxes on imported EVs could disrupt the market and upset local players like Tata and Mahindra that are investing to build electric cars at home, the Indian official said. The policy is still in the initial stages of deliberation and the final tax rate could change, two of the sources said.
