India's EV Import Scheme Fails to Attract Automakers

Three months after the Centre unveiled a scheme offering duty breaks on imported electric cars in return for pledges to local manufacture, primarily intended to attract Tesla, no automaker has shown interest.“No one has come,” a senior government official said when asked how many auto players had indicated interest. The Ministry of Heavy Industries launched a portal on June 24 to accept applications under the Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI). The final date to apply for the scheme is October 21, 2025.

While the import policy was announced in March 2024 followed by a draft notification on implementation guidelines, the final guidelines were notified in June 2025. Under the policy, firms will be permitted to import up to 8,000 electric four-wheeler units annually at a reduced import duty of 15%, versus 70-100% at present, provided they commit to an investment of ₹4,150 crore to establish local manufacturing facilities. They must also provide a bank guarantee of at least ₹4,150 crore ($500 million) with the application. The original equipment manufacturer (OEM) must reach 25% DVA (domestic value add) within three years and 50% within five years.

Officials said that automakers were waiting for major Free Trade Agreements such as those with the U.S. and the European Union to be finalised in case those offered favourable concessions. They pointed to the example of the FTA with the U.K., where import duties on U.K.-built vehicles, including electric and conventional cars, are reduced from over 100% to about 10%, but only for a restricted number of vehicles under an annual quota. Only large-engine premium vehicles (petrol above 3000 cc, diesel above 2500 cc), and luxury cars priced above £40,000 (which includes cost, insurance and freight), qualify for these concessions; mass-market models and lower-priced vehicles remain excluded.

While a Tesla representative attended only the first stakeholders’ meeting held last year after the draft guidelines were issued, “there has been no communication” since between the auto giant and the government, officials said.In the meantime, Tesla has opened a showroom each in Mumbai and the National Capital Region for completely built units.

To a question on whether the government would adjust the scheme to make it more appealing, officials said there had been no requests from auto companies to alter the policy.Responding to automakers’ concerns about the high investment requirement of ₹4,150 crore, the above-quoted official dismissed them, saying that original equipment manufacturers would effectively be redirecting costs paid as import duty into investments for local production. However, the official said some players were worried about the sales volume they would achieve for cars priced above $35,000.

The tepid response comes despite earlier indications from automobile industry executives suggesting that global OEMs such as Hyundai Motor India, Kia India, the Volkswagen Group, and Toyota might be interested in the policy. While a Vietnamese EV maker established an assembly plant in Thoothukudi and pledged an investment of $500 million, it does not qualify for the scheme as investments were made before last year’s draft notification in March.