Written by: Tabish Sultan
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EV Spotlight
The Indian government has plans in motion for reducing the 110 percent tax import fee down to 15 percent on EVs. This generous cut will help make the price for EVs affordable and bring in industry greats like Tesla to India.
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In order for car companies to benefit from the drastic tax cut, they would be required to invest 4150 crores. The money, however, could only be allocated towards building EV factories, and not for buying land or constructing buildings.
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To attain the reduced import tax, companies will require beating the tax revenue estimate of 2,500 crores in two years, 5,000 crores after four years, and 7,500 after five years.
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Companies are required to produce EVs in India within a span of three years to enjoy the lower tax. Initially, 25% of the components used need to be Indian made, which then increases to 50% within five years.
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Every year, a total of 8000 electric vehicles, which are priced above $35,000, can be imported with the tax break. This serves to benefit local companies while still permitting some foreign EVs.
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Despite high tax barriers in India, Tesla has been wanting to expand into the country. This new rule enables their entry into India as long as they comply with building a factory there within three years.
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The new policy is still in discussion. If approved, companies can apply in the upcoming months, meaning lower priced imported EVs could start arriving in India by the end of this year.
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Those EV makers such as Mercedes and Rivian could also enter India with this new policy. They could turn India into a market for new luxury EVs if they choose to invest there.
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