To prepare India into a leading manufacturing hub, the government gives its nod to a new electric vehicle strategy with tax breaks.

In three years the country plans to bring down import taxes on a few electric vehicles for companies that intend to invest over $ 500 million to set up production facilities.

Right now the country is in the middle of attempting to attract international investments from companies like Tesla for domestic production. The latest falls in line with those efforts and to promote a robust EV ecosystem.

The strategy calls for an expenditure of Rs. 4,150 crore or $ 500 million and does not yet have a maximum amount that EV makers can invest to support domestic production of cutting-edge technology.

If a car with minimum CIF value of $ 35,000 requires the producer to establish manufacturing facilities within three years in the country. If otherwise, it will be subjected to 15 percent customs charge (applying to completely knocked down units) for a term of five years.

The number of EVs that can be imported will be made to invest about Rs.6,484 crore, equivalent to the PLI scheme incentive. In case the investment exceeds $ 800 million, a maximum of 40,000 EVs at a rate of no more than 8,000 per year will be permitted.

In three-years time, manufacturers are required to build factory plants in the nation and commence producing EVs for sale.

Not more than five years, they are required to obtain a minimum of 50 percent domestic value addition (DVA) and 25 percent localization level is required in the third year during the time frame.

Under the initiative, companies are told to show proof of a bank support to back-up their investment plans.This guarantee will be enforced in the event that the DVA and minimum investment standards are not met.

Major Indian companies Mahindra & Mahindra and Tata Motors have expressed worries regarding lower EV taxation, highlighting the necessity of early-stage government support. These manufacturers are concerned about rising competition from luxury EVs that are favored globally as a result of tax breaks.

The main topic of conversation has been Tesla's proposal for an initial tariff concession, which would reduce customs charges by 70 percent for cars under $ 40,000 and 100 percent for cars costing more.

However, Piyush Goyal, the minister of commerce and industry in India, has stated that the country will continue to implement its rules on its own, without changing them particularly to satisfy US electric vehicle (EV) manufacturer Tesla's demands.

He had stressed that the goal of India's tariff policies and legislation is to entice global producers of all-electric vehicles to enter the country's quickly developing market.