India approves new EV policy in boost to Tesla's market entry plans

The Indian government on Friday (March 15, 2024) approved the new EV policy. The focus of the government in the new EV policy will be on domestic EV manufacturing. The policy is designed also to attract investments in the e-vehicle space by reputed global EV manufacturers.

The approval of the EV policy will potentially strengthen Tesla's entry into the Indian market.

After the implementation of the EV policy, the government is expecting a 50 per cent domestic value addition in the next five years.

NITI Aayog has projected that by the year 2030, the penetration of various categories of EVs is likely to be as follows:
• 35-40 per cent for two wheelers
• 9-11 per cent for private four wheelers
• 20-25 per cent for shared four wheelers
• 13-16 per cent for buses

The government will cooperate for e 4W in India

A company will have to invest a minimum of Rs 4150 crore for the under the policy. However, there is no maximum limit for investment.

The company will have to be made its plant operational in 3 years.

The company also has to reach 50 per cent domestic value addition (DVA) within 5 years.

To enhance domestic value addition (DVA) during manufacturing, the government has set the target to localise a level of 25 per cent by the third year and 50 per cent by the fifth year.

The customs duty of 15% (as applicable to CKD units) would be applicable on vehicle of minimum CIF value of USD 35,000 and above for a total period of 5 years subject to the manufacturer setting up manufacturing facilities in India within a 3-year period

If Tesla comes, first, the plant will have to be set up and then production will start.

The bank guarantee for companies will be refunded if 50 per cent DVA is reached.

The government will issue application within 120 days.