It is reported that the Indian Government has endorsed an e-vehicle program that is an effort to help make India an one of the largest electric vehicle manufacturing centers around the globe. Presently, international EV manufacturers aren’t keen to join the Indian market due to the high import tax rates that render their products expensive for the buyers they want to. This policy allows companies to import EVs into India by way of CBU (completely constructed) units with considerably lower taxes on imports but only if certain requirements are satisfied.
What are the parameters? The parameters are more similar to those established in the Indian government for these international brands. The following are the parameters:
The world’s largest EV manufacturer must set up an manufacturing facility in India within three years and invest at the minimum of $4150 million (approximately US$ 500million).
Additionally, they must be sure that they reach 25 percent localisation by the third year, and 50% localisation by 5th year. Additionally, they must begin commercial production of electric vehicles within the initial 3 years.
The CIF minimum (cost + insurance plus shipping) amount of the vehicle that is imported must be in the range of the amount of Rs 28.99 million (USD 35,00).
Electric vehicle makers can import up to 8,800 units of their EVs each year under this program.
But that’s not all. The investment that the brand makes has to be secured by a bank guarantee and in the event that the business does not adhere to the timeframes mentioned above, it cannot receive the guarantee back.
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What’s The Benefit?
If the maker of the electric vehicle gets cleared from HMI Ministry of Heavy Industries (HMI) when it invests in the project, which is secured by the banK guarantee, and also promises to meet the other requirements within the timeframe the company will be capable of importing its EVs at a price that is lower than the import tax of only 15 percent. As a reference, the standard CBU import tax is 100 percent. This is why businesses aren’t able to sell enough of their imported goods in India.
Arrival Of Tesla & Other Brands
Tesla has been preparing to be a part of in the Indian market for some time and has repeatedly expressed its desire to reduce import tariffs on EVs. The American automaker has often cited these taxes as one of the major barriers to bringing its famous electric vehicles like models like the Tesla Model 3 and Tesla Model Y to India which would been priced similarly to high-end EVs with the higher rates of import. With the help of this e-car policy, Tesla might be able implement its India plans into practice if it succeeds in meeting the requirements set forth.
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Another EV manufacturer that will gain from this program is VinFast and has been waiting for its entry into to the Indian market. VinFast is a Vietnamese brand has a little advantage since it has already begun work to establish local manufacturing in India.
Long-term Benefits Of The New Policy
We understand that this policy could encourage international brands to launch their electric vehicles into India in a short time however, how will it aid the government and citizens? In lieu of simply importing their cars into India and then importing them into India, they will need to build manufacturing facilities in India to reap the benefits of this policy and, in turn, result in more jobs.
Furthermore, since the companies must achieve 50% localisation to benefit they will be able to increase the sales of a few Indian firms that provide electric vehicle parts as well as aid in the creation of more of these businesses in the country.
Tesla Model Y
For the average person who live in India, we will be able to use automobile technologies from around the world. The policy will allow them to be cheaper due to lower import prices and localization. Additionally the Indian government is looking to promote EVs across India to cut down on environmental pollution and to move towards a more green and sustainable future.