Govt set to notify EV policy with new investment rules as Tesla prepares for India entry

The Centre is reportedly planning to notify the new electric vehicle (EV) policy, which it had announced last March, soon. As per the report of Times of India's Sidhartha, the new policy may mandate turnover of Rs 2,500 crore by the second year of operations.

The proposed policy will permit companies to set up assembly operations within existing factory premises, the report claimed. However, the required investment of Rs 4,150 crore (approximately $500 million) must come from new capital infusion, excluding prior investments and costs related to land and buildings. Companies meeting these conditions will qualify for reduced import duties of 15%, significantly lower than the current 110% tariff, the report states.

The policy guidelines, formulated through extensive industry consultations, are awaiting approval from Heavy Industries Minister H.D. Kumaraswamy. A government source told TOI, "The ministry is hoping to notify them in the next one or two weeks, after which the application window will be opened."

Companies will have 120 days to apply, with the policy allowing annual imports of up to 8,000 premium EVs (priced above $35,000) at reduced duties. Applicants must establish operational manufacturing facilities within three years and achieve 25% domestic value addition initially, increasing to 50% within five years of ministry approval.

The regulations outline progressive turnover targets, requiring Rs 2,500 crore by the second year, Rs 5,000 crore by the fourth year, and Rs 7,500 crore by the fifth year from the start of manufacturing. If the process remains on schedule, approval letters could be issued by July-August, allowing imports to begin soon after.

While Hyundai and Volkswagen Group have expressed interest during government discussions, their investment commitment remains uncertain. Tesla, widely considered a key beneficiary of this policy introduced last March, has yet to engage with the government. Earlier this week reports claimed that the US car maker is planning to enter India in April this year with a cheaper model priced at Rs 21 lakh. Reportedly it has selected Mumbai and Delhi to set up its showrooms in the first phase.