India Revises EV Policy as Tesla Plans Market Entry in 2025

India is set to revise its electric vehicle (EV) policy ahead of Tesla’s anticipated entry into the market this year, with changes aimed at attracting global automakers.

The revised framework may require car manufacturers to achieve a turnover of Rs 2,500 crore in their second year of operations, sources familiar with the matter said.

The central government is also considering further import duty concessions. Applications under the new policy could open in mid-March, with approvals expected by August, paving the way for vehicle imports shortly after, sources added.

Tesla, led by Elon Musk, is expected to begin operations in India with imports from its Berlin Gigafactory in Europe before gradually ramping up local sourcing. While Tesla’s market entry has drawn significant attention, the policy changes are also expected to attract other major automakers looking to expand in the country’s growing EV sector.

India introduced a revised EV policy in March 2024, lowering the Customs duty to 15 per cent under specific conditions. The framework mandated a minimum investment of Rs 4,150 crore, with production to commence within three years. Automakers were required to achieve 25 per cent domestic value addition (DVA) within three years and increase it to 50 per cent within five years.

The policy is seen as a crucial step in bolstering India’s EV industry, which analysts predict could reach over 40 per cent market penetration and generate $100 billion in revenue by 2030.

Tesla is expected to follow a “top-down” strategy in India, initially launching premium models before introducing more affordable options. The company plans to import the Model Y SUV, produced in right-hand drive at its Berlin plant, as its first offering in the Indian market.

Tesla, which has already established an office in Pune, is reportedly scouting locations in Mumbai’s Bandra-Kurla Complex (BKC) and Delhi’s Aerocity for its first retail showrooms. Additionally, the company has listed job openings for at least 13 positions in India.