India’s still-under-development policy to entice electric vehicle (EVs) manufacturers to both invest in local production and import their products has had a new stipulation added to it, according to documents seen by Reuters. To receive a lower duty rate of 15% instead of 100%, automakers must invest at least US$500m locally; now the Indian government requires that no more than 5% of that sum can go towards charging infrastructure.
“Expenditure incurred on charging infrastructure would be considered up to (a) maximum 5% of the committed investment,” the documents state. Ideally, the goal of the policy is to have foreign automakers invest as much money in local vehicle assembly as possible. The development could trigger some blowback from automakers looking to invest in India in other ways, including expanding charging infrastructure, but also in local dealership networks.
The development follows related news that Tesla plans to import thousands of its models through a port near Mumbai in a few months’ time, marking the EV brand’s first-ever entry into the country. The automaker had initially planned to invest up to US$3bn locally, including using the country as a manufacturing hub, but this fell through when it announced plans to lay off 10% of its global workforce early in 2024.
Sources told Bloomberg on February 20 that Tesla has no plans to invest in local production, despite preparing for market entry. Given the latest documents were drafted no later than January—subsequent to which Indian Prime Minister Narendra Modi met Tesla’s Chief Executive Elon Musk at the White House—the EV maker likely now expects India to get rid of the new stipulation, or a special trade deal with the US has been worked out.
