Tesla, Vinfast & more: EV policy incentive may attract global interest, says official

The Centre announced a new electric vehicle (EV) policy that is expected to provide a major boost to global players like Tesla and Vinfast's plans to enter the Indian market. Under the new policy, the government will be lowering import taxes on certain electric vehicles for companies that commit to at least Rs 4150 crore ($500 million) in investment in addition to building a domestic manufacturing facility in the country.

Speaking about the new EV policy, a government official said the idea is to attract all interested companies not just Tesla. "The idea should be to attract all companies (in the EV sector), not only Tesla, but many others can come in with this kind of facility," the official told Moneycontrol. 

The official added: "So if you can do a PLI (production-linked incentive) scheme, you can also take this route (the EV policy) to attract global investment. This is allowing imports at a concessional rate but is also mandating localisation." 

The new policy gives import duty concessions to companies that commit to invest a minimum of $500 million or a little over Rs 4,150 crore and establish manufacturing facilities within India in three years with at least 25 per cent of components sourced locally.
 

 Vinfast has already announced an investment of Rs 4,000 crore to set up an electric vehicle (EV) plant in Tamil Nad, now Tesla's plans will be closely watched.

"For faster adoption of EVs, the basket of options available for the buyers needs to expand. If we look at the ICE market, there are various segments (by form factor, pricing, quality, product positioning, etc), and each segment has healthy competition between the manufacturers. This is not the case with EVs yet and this scheme will help in creating more options for the buyers. As the number of EVs on the road increases, the entire ecosystem will get an automatic boost. The Government is not allowing pure import however providing some leeway to global manufacturers in terms of timelines for setting up the local manufacturing infrastructure, till the time volumes justify another plant them," said Ashish Bagadia, Partner, Corporate Finance and Investment Banking, BDO India.

Source:- Business Today