NEW DELHI (Diya TV) — India is planning to enhance its incentives for electric vehicle manufacturing after being disappointed by Tesla’s decision to not invest on a large scale, a government source familiar with the matter said. The move is part of efforts to boost India’s chances of becoming a global hub for electric vehicle manufacturing.
The incentive package, to be announced in the early part of next year, is going to increase the financial support for both the local manufacturers and foreign investors, the source said. It follows India’s first disappointment with Tesla, which has delayed plans to set up a manufacturing plant in the country despite prolonged negotiations with the government.
Tesla, which is led by Elon Musk, had been negotiating with India since 2021 to see if it would build a factory there. The two sides haven’t made any progress yet. One of the key areas of disagreement was over import taxes: India refused to reduce these taxes for Tesla, which wanted lower tariffs on completely assembled vehicles. Musk had previously said that if the Indian government insisted on imposing as much as 100% import tariff on foreign EVs, he might not know how well Indian consumers would like his products.
However, the Indian government insisted that Tesla focus on manufacturing in-country to qualify for tax breaks and other benefits. “We want companies to come and make in India,” Indian Commerce Minister Piyush Goyal said earlier this year. “Our policies will continue to support those who invest in local manufacturing.”
Industry analysts say that India’s move to expand incentives reflects its desire to reduce dependence on foreign imports and push local companies to lead the EV charge. Higher subsidies for companies that manufacture key EV components, such as batteries and motors, as well as for startups developing EV technology, are likely to be included in the revised policies.
Several domestic companies, including Tata Motors and Mahindra & Mahindra, have already been ramping up their EV production as part of the government’s “Make in India” initiative. Tata Motors recently announced plans to invest $2 billion in its EV division over the next five years.
Even with the disappointment from Tesla, India has established itself as a very promising market for electric vehicles. The sales of electric vehicles in the country have been rising steadily. The government is targeting to have 30% of new vehicle sales electric by 2030. This goal is driven by a mix of incentives, infrastructure development, and increasing demand for cleaner transportation options in major cities like Mumbai and Bengaluru.
The new perks are likely to attract not only vehicle manufacturers but also companies involved with charging infrastructure and green energy. The government source emphasized that the policy would aid India in catching up on other global players, and one such country is China, which has established a stronghold as the world’s largest EV market.
This push to expand EV manufacturing capabilities in India indicates a long-term commitment to sustainable mobility, even if the country is facing some challenges in attracting global automakers like Tesla to set up shop locally.
