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India to limit investment in charging infrastructure at 5%

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document

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Charging cap to focus investment in manufacturing - source

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Government expected to finalise EV policy next month -

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Tesla picks showroom space in Mumbai, Delhi

By Aditi Shah

NEW DELHI, Feb 21 (Reuters) - India's EV policy, which

offers import tax cuts for foreign automakers investing in the

country, will restrict them from using funds spent on charging

infrastructure for such relief, increasing their car

manufacturing, a government document shows.

India last year announced a policy aimed at attracting Tesla

to manufacture EVs in the country and let such foreign

carmakers import cars at a 15% tariff, from around 100% now, but

only if 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 creation of

charging infrastructure, even if they spend much more on the

power network, according to government document detailing draft

rules which is not public but was seen by Reuters.

The government's plan comes just as Tesla gets 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 privy to discussions with the government

said the call is being taken as New Delhi wants companies to

prioritise manufacturing, and not just charging networks.

In India's nascent EV market, many buyers have shied away

from making purchases due to lack of fast chargers.

"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 source with direct knowledge of the matter.

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 pipeline of

new charging" sites, and select locations for deployment.

The EV giant's chief Elon Musk put on hold his manufacturing

investment plans for India last year, amid falling electric car

sales globally.

Tesla's immediate India plan is to import cars and sell them

in India. Musk and U.S. President Donald Trump however have

repeatedly said India's tariffs for cars are too high.

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.

If they fail to do so, they will need to pay a penalty of

between 1%-3% of the revenue shortfall.

Other foreign automakers like Hyundai

and Toyota Motor ( TM ) have shown interest in making EVs in

India at their existing and new factories.