India to cap investment in EV charging for tariff relief as Tesla entry looms: Report

India's EV policy that offers import tax cuts for foreign auto firms investing in the country, will restrict them from using funds spent on charging infrastructure for such relief, increasing their car manufacturing, Reuters reported citing a government document. 

Last year the government announced a policy aimed at wooing Tesla to make electric vehicles in the country and let such foreign car makers import cars at a 15% tariff, from around 100% now, the caveat being that they invest at least $500 million for a factory.

But the policy will mandate that automakers can count only 5% of their total EV investment as coming from the creation of charging infrastructure, even if they spend much more on the power network, as per a government document detailing draft rules which is not public but was seen by Reuters.

The government's plan comes just as Tesla inches closer to entering India with imported cars, having finalised two locations for showrooms. The restriction could upset those automakers who may want to invest a bigger chunk of their planned India investments into creating charging networks, which remain far and few in India.

An industry source with knowledge of discussions with the government noted that the call was being taken as New Delhi wants companies to prioritise manufacturing, and not just charging networks.

"Expenditure incurred on charging infrastructure would be considered up to (a) maximum 5% of the committed investment," the 47-page draft document from January 2025 stated.

The government is holding consultations with carmakers and other stakeholders on the draft rules and will finalise them by next month, said a person with direct knowledge of the matter.

Reuters could not elicit a response from the Ministry of Heavy Industries, spearheading the policy. 

Tesla in a job advert last week said it is also looking for a "charging developer" who would "develop and manage pipeline of new charging" sites, and select locations for deployment.

The new draft rules said companies which commit to India manufacturing will also need to meet a minimum turnover of $577 million by the end of the fourth year of operation, and $866 million by the fifth year, to be eligible for lower tariffs on up to 8,000 electric cars per year.