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The Center on Friday approved a new policy for electric vehicles, providing duty concessions on imported cars to companies investing at least USD 500 million to set up manufacturing units in India.
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What is the provision for reduction in import rate in the new EV policy?
• Foreign companies must invest at least $500 million or approx. Under the policy, Rs 4,150 crore will be invested in investment and manufacturing facilities within three years to avail concessions on import tax, the government said in a statement.
• Duty concessions on total imported EVs are limited to the investment made or 6,484 crore (equivalent to incentive under PLI scheme), whichever is less.
• If the investment exceeds US$800 million, a maximum of 40,000 EV imports will be allowed for five years at a reduced tax of 15 per cent on cars priced at $35,000 and above, not exceeding 8,000 per year. Unutilized annual import limit is allowed to be carried forward.
• The investment commitment of the company should be backed by a bank guarantee in lieu of customs duty waived.
• As stated in the announcement, failure to meet the domestic value addition (DVA) and minimum investment criteria as outlined in the scheme guidelines will result in invocation of bank guarantee.
How big a win is this for Elon Musk’s Tesla?
The policy cut in import tax rates is a significant win for Tesla, for which the company has been lobbying extensively, with its chief Elon Musk questioning these taxes as “one of the highest taxes in the world”. .
Despite years of efforts to enter India, Tesla faced hurdles from New Delhi, which demanded a commitment to local manufacturing. In recent months, Tesla representatives have frequently visited India and CEO Elon Musk even met Prime Minister Narendra Modi last year.
At present, cars imported as completely built units (CBUs) attract customs duty ranging from 60 per cent to 100 per cent depending on their cost.
Tesla’s cheapest vehicle, the Model 3, starts at $38,990, above the minimum price in the policy in New York, according to the carmaker’s website.
‘No special treatment with Tesla’
Recently, Commerce and Industry Minister Piyush Goyal said that India will not align its policies with that of US EV maker Tesla, and its laws and tariff rules to attract all electric vehicle manufacturers from around the world to set up a base. Will be prepared. The world’s fastest growing economy.
Also read- Will the Center change the rules for Elon Musk’s EV maker Tesla? Union Minister Piyush Goyal answers
According to the statement, the new EV policy will “provide Indian consumers access to the latest technology, promote Make in India initiatives, strengthen the EV ecosystem by promoting healthy competition among EV players, leading to higher volume production, greater efficiency in scale and Economies will grow.” Cost of production will reduce, crude oil imports will reduce, trade deficit will reduce, air pollution will reduce especially in cities and there will be a positive impact on health and environment.
It said the policy aims to attract investments in the e-vehicle sector from reputed global electric vehicle manufacturers.
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