According to a report on Moneycontrol, the government is anticipating a surge in domestic value addition (DVA) with the arrival of Tesla's vehicles in India. It aims to achieve a 50% DVA target in less than three years, solely through Tesla's operations.
Under the existing electric vehicles (EVs) policy, manufacturers must achieve a minimum of 50% domestic value addition within a maximum period of five years to qualify for a lower import duty rate of 15%. With India's robust component ecosystem for EVs, officials are confident in meeting this requirement well before the deadline.
The report addresses concerns about Tesla potentially resorting to assembly rather than manufacturing in India. Officials emphasize the policy's stringent norms for component sourcing, noting Tesla's significant annual procurement of components worth $1.5 billion to $2 billion from India.
India's auto component industry is highlighted as stronger compared to mobiles and electronics. This strength suggests that Tesla's EVs can readily meet the local sourcing requirements outlined in the policy.
The EV policy, while offering a substantial reduction in import duty, includes conditions aimed at supporting India's manufacturing objectives. These include a minimum investment of Rs 4,150 crore and a three-year timeline for setting up manufacturing facilities to commence commercial production of e-vehicles.
Companies meeting these criteria will be allowed to import 8,000 EVs annually at a lower import duty rate. Duty exemption is capped at the annual production-linked incentive (PLI) or the entity's investment, with companies required to provide a bank guarantee to back their investment commitment.
