As Tesla prepares to enter the market, India restricts investments in EV charging

India offers a significantly reduced 15 per cent import tariff on EVs, down from approximately 100 per cent, to companies like Tesla. However, to qualify, automakers must invest at least $500 million in a domestic factory. Reuters reports that investments in charging infrastructure cannot be used to meet this requirement, ensuring the focus remains on local manufacturing.

A government document, not yet public, indicates that the forthcoming EV policy will mandate a 5 per cent cap on the portion of total investment automakers can allocate to charging infrastructure development, even if actual costs exceed this limit.

With Tesla nearing its Indian market entry via direct import routes and showrooms, the government’s policy limiting charging infrastructure investment may create friction with automakers who prefer to focus on building charging networks, which are currently in a nascent stage in India.

A 47-page draft document from January 2025 reveals that “expenditure incurred on charging infrastructure would be considered up to (a) maximum 5 per cent of the committed investment.” This restriction highlights the government’s focus on manufacturing and its limitations on charging network development.

According to a report, an industry source stated that the government is holding consultations with carmakers and other stakeholders on the draft rules and will finalise them by next month. India’s Ministry of Heavy Industries, which is spearheading the new policy, did not respond to an email seeking comment. Tesla in a job advert last week said it is also looking for a “charging developer” who would “develop and manage a pipeline of new charging” sites, and select locations for deployment. Tesla’s immediate India plan is to import cars from Germany and sell them in India.

The new draft rules said companies which commit to manufacturing in India will 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.