India is revamping its electric vehicle (EV) incentive policy to attract broader automaker participation after Tesla abandoned its plans for local manufacturing earlier this year. The revised scheme will now extend benefits to automakers producing EVs at existing factories, in addition to those building new plants, aiming to accelerate domestic EV production.
The original policy, launched in March, offers a significant tax reduction for automakers investing $500 million or more in EV production. Import taxes, which can reach up to 100%, are slashed to 15% for up to 8,000 EVs annually, provided that at least 50% of components are sourced locally.
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The updated policy allows automakers to count investments in EV production lines within existing facilities toward the $500 million threshold, as long as they meet local sourcing criteria. New factories can include machinery costs for EV production even if the equipment is used for other vehicles. Automakers must also meet minimum revenue targets from EV sales to qualify for these benefits.
Toyota, Hyundai, and Volkswagen have expressed interest in the revised policy but have sought clarifications. Toyota asked if investments in separate assembly lines within multi-powertrain plants would qualify, while Hyundai queried whether R&D expenses could be included in the investment total. The government clarified that R&D costs will not count, but investments in charging infrastructure remain under discussion.
India plans to finalise the policy by March 2025, reflecting its aim to establish the country as a major hub for global EV manufacturing while addressing automaker concerns and ensuring fair participation.
