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Govt To Cut EV Import Taxes If USD 500 Million Invested



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The government will reduce the import taxes on certain number of electric vehicles for companies which will be ready to invest minimum USD 500 million (INR 4,150 crore) with setting up of manufacturing facilities in three years for in India, the Ministry of Commerce & Industry said on Friday.

The policy which the government has said is ‘designed to attract investments in the e-vehicle space by reputed global EV manufacturers’ will potentially boost entry plans of Tesla which according to reports, was close to an agreement to set up a manufacturing plant in Gujarat.

The policy requires EV companies to invest a minimum of USD 500 million, set up a manufacturing plant within three years, and reach 50 per cent Domestic Value Addition (DVA) within five years. This includes 25 per cent localisation by the third year and 50 per cent by the fifth.

“The policy will provide Indian consumers with access to latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude Oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment,” the ministry said in a statement.

According to it, the customs duty of 15% (as applicable to Completely Knocked Down units) would be applicable on vehicle of minimum CIF value of USD 35,000 and above for a total period of five years subject to the manufacturer setting up manufacturing facilities in India within a three-year period.

The duty foregone on the total number of EV allowed for import would be limited to the investment made or INR 6484 Cr (equal to incentive under PLI scheme) whichever is lower.

“A maximum of 40,000 EVs at the rate of not more than 8,000 per year would be permissible if the investment is of USD 800 million or more. The carryover of unutilized annual import limits would be permitted,” it added.

“The approval of the new E-Vehicle policy marks a pivotal moment in our nation’s mobility landscape. This progressive step not only solidifies India’s position as a manufacturing hub for EVs but also fosters a conducive environment for global players to invest in our burgeoning market.

Reacting to the new E-Vehicle Policy, Sunjay Kapur, Chairman, Sona Comstar & Deputy Chair, CII Northern Region said that the policy underscores the government’s commitment to nurturing a robust EV ecosystem.

He said that the policy heralds a new era of innovation and accessibility to cutting-edge technology and amplifies the ‘Make in India’ initiative.

“By incentivising local manufacturing and fostering healthy competition, this policy will not only accelerate the adoption of EVs but also bolster economic growth by way of reducing our reliance on imported crude oil and mitigating environmental impact, particularly in urban areas,” he added.

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