India is set to broaden its electric vehicle (EV) incentives to include automakers manufacturing EVs at existing factories, a shift from the earlier focus on attracting investments for new plants, according to a source familiar with the matter. This policy adjustment aims to stimulate EV production and investment across the board, regardless of whether automakers build new facilities or repurpose existing ones.
The original policy, announced in March, was initially tailored to entice Tesla to establish local manufacturing operations. However, the U.S. automaker has since backed away from those plans. Meanwhile, other international automakers, including Toyota and Hyundai, have shown interest in EV production in India, both at new and existing factories, as per minutes from a meeting with the Ministry of Heavy Industries.
Key features of the EV policy include incentives for automakers investing a minimum of $500 million in EV manufacturing in India, provided that at least 50% of components are sourced locally. Qualified automakers are eligible for a significant reduction in import taxes—down to 15% from rates as high as 100%—for up to 8,000 EVs annually.
The decision to extend these benefits to existing factories aims to unlock investments from automakers currently producing gasoline and hybrid vehicles in India, making the policy more inclusive and flexible. This move is expected to accelerate the country's adoption of EV manufacturing and further India’s goal of becoming a global EV hub.
