Subsequent to a proposal from Tesla, which is mulling an entry into India’s automotive market, the country’s commerce ministry is working on a new electric vehicle policy that might slash import taxes for automakers who commit to some local manufacturing, reports Reuters.
The policy being considered may allow automakers to import fully-built EVs into India at a reduced tax as low as 15%, compared to the current 100% that applies to cars which cost above $40,000 and 70% import tax for the rest. The policy is still in the initial stages of deliberation and the final tax rate could change.
Tesla first attempted to enter India in 2021 and suggested lowering the 100% import tax for EVs. Last year, the talks between Tesla and the Indian government collapsed when officials informed the company to first commit to local manufacturing.
More recently, Tesla has told Indian officials it is keen to set up a local factory and make a new EV priced around $24,000, roughly 25% cheaper than its current entry model, for both the Indian market and export. Tesla also put forth that a potential India factory may be able to operate at full capacity by 2030.
Prime Minister Narendra Modi, who met with CEO Elon Musk in June, has been tracking progress closely.
Last updated: December 26th, 2025
