NEW DELHI, 2nd April 2025
Government of India’s key policymakers lobbying with the Trump Administration have almost made up their mind to allow EVs from the United States at a low tariff rate, especially with Elon Musk’s Tesla supporting the US Government to drive such a move to get a large slice of India’s EV industry.
According to a Reuters report, key policymakers in India are actively engaging with the Trump administration and appear willing to allow the import of EVs from the United States at reduced rates, particularly with Tesla CEO Elon Musk’s support.
According to a report citing two government officials, the electric vehicle sector will most likely be included in the initial phase of tariff reductions as part of a proposed bilateral trade agreement.
“We have protected the auto industry for far too long. “It is time to open it up,” one official told Reuters. The source also stated that EV tariffs will be reduced “significantly” alongside other products.
Details on the scope of the planned duty reductions were not provided, as negotiations with Washington are still ongoing.
The upcoming duty structure will differ significantly from the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), which reduced import duty on electric vehicles from 110% to 15% for five years beginning March 15, 2022, with EVs priced at a minimum of $35,000 (CIF value).
The reduced import duty came with the caveat that premium EVs would be manufactured in India for five years. The import duty on cars priced above $35,000 was set to fall from 110% to 15%. This reduced rate was to be in effect for five years, beginning with the date the government issued its approval letter. Manufacturers must invest a minimum of Rs 4,150 crore, with no cap on investment.
