The Indian government is in the process of formulating a policy to incentivize local production of electric vehicles (EVs). This comes as foreign EV manufacturers, including Tesla led by Elon Musk and Vietnam-based VinFast, are planning their entry into the Indian market. While the final guidelines for the policy are yet to be determined, domestic EV manufacturers are expressing concerns about the potential impact of the government’s incentives strategy. Local EV makers fear that offering preferential tariffs to foreign companies like Tesla could negatively affect the investments they have already made or are currently making in EV production.
In response to the worries of local EV manufacturers, government officials have assured that any incentives provided to promote the local manufacturing of electric vehicles will be equally applicable to both foreign and domestic investors. There were concerns among local EV makers that the government might offer special concessions, especially in import duties, to Tesla. The US-based automaker has reportedly requested provisional tariff concessions as a condition for establishing a manufacturing facility in India. However, the government is reportedly against providing company-specific exemptions and aims to maintain a uniform approach for the entire industry.
Senior government officials emphasized that any incentives offered would be fair to both domestic and foreign investors, emphasizing the government’s commitment to the industry as a whole rather than specific companies. While no formal objections have been raised by the industry, some automakers are cautious about potential reductions in import duties that could provide an advantage to Tesla.
Several Indian automakers, such as Tata Motors and Mahindra & Mahindra, are already engaged in local EV production. Additionally, companies like Maruti Suzuki and Hyundai-Kia have announced significant investments in setting up battery and battery-pack assembly plants in India, with plans to launch more electric vehicles by 2030. The Department for Promotion of Industry and Internal Trade is actively discussing a scheme to subsidize electric four-wheeler manufacturers investing in local EV production.
