New Electric Vehicle Policy To Global Automakers: Make-In-India To Sell-In-India

Make in India To Sell in India: Gov’t’s Tough Message to Global EV Makers

As India opens applications for its ambitious new EV policy, the message to global carmakers is simple: If you want to sell in India, you must build in India. With the country now the world’s third-largest car market, international manufacturers are eyeing the opportunity, but the conditions are far from easy.

A High-Stakes Bargain with Heavy Conditions

The policy, unveiled in March 2024, offers a significant carrot: import duties on high-end EVs priced above $35,000 can drop from as high as 100 percent to just 15 percent. But that privilege comes at a cost. Carmakers must invest at least $500 million and commit to setting up local manufacturing within three years.

It doesn’t stop there. By the third year, these manufacturers must achieve 25 percent domestic value addition, which must rise to 50 percent by the fifth year. This progressive threshold ensures foreign players cannot simply set up token facilities and import the rest.

The government is reportedly considering even tougher metrics. Companies may be asked to post minimum annual revenues of ₹5,000 crore by the fourth year and ₹7,500 crore by year five. Those who fall short could face penalties on the revenue shortfall. It’s a mechanism designed to weed out half-hearted entrants and speculative ventures, forcing only the most committed players to take the leap.

Small Import Window, Big Manufacturing Push

The policy allows for the import of up to 8,000 vehicles annually at the reduced tariff, offering a testing ground for new entrants. This limited quota prevents companies from using the policy as a backdoor for mass imports and keeps the spotlight firmly on long-term manufacturing.

Global Carmakers Are Cautious, Not All Are Convinced

Despite the bold intent, the policy has met with a mixed response. Tesla, the most talked-about name in this space, has yet to publicly commit. The silence is telling, especially for a company known for aggressive global expansion.

Vietnam’s VinFast initially showed keen interest but now seems inclined towards starting full-fledged local production instead of leveraging the import-first route. For them, India appears to be a base market they can grow into and not just test the waters.

German luxury players, including those under the Volkswagen Group, are interested but hesitant. Their view is that the premium EV market in India remains too niche to justify the kind of investment the policy demands.

Chinese manufacturer BYD, once ready with a billion-dollar plan, hit a wall when national security concerns prompted a rethink. The situation with Chinese firms is unique. On one hand, they have the financial muscle and the need for a large export market like India. On the other, India remains wary of tech transfers and strategic dependencies, while China fears opening doors that could strengthen a direct competitor in EV manufacturing.

Indian Players Want a Fair Fight

At home, established manufacturers like Tata Motors and Mahindra are watching closely. They have a head start in India’s EV space and worry that slashed import duties for foreign premium EVs could erode their advantage. Their preference is for a policy that continues to focus purely on EVs rather than expanding incentives to hybrids, which could dilute the market signal and slow down the shift to full electrification.

This friction reveals the delicate balancing act the government faces - how to welcome global players without discouraging those already building the domestic EV ecosystem from scratch.

Will the Policy Deliver on Its Big Promise?

The real aim of the policy goes beyond boosting EV adoption. It’s about reshaping India into a global EV manufacturing destination. With local EV sales already crossing 4.1 million annually and growing fast, the market offers scale. But that scale is only meaningful if foreign carmakers believe the long-term gains justify the upfront investment and localisation hurdles.

The government is banking on big-ticket commitments to fuel not just EV sales, but jobs, R&D, supplier ecosystems, and export capabilities. It’s a bold bet. If successful, India could emerge as one of the world’s top EV manufacturing bases. But if the conditions prove too rigid, it may force policymakers to adjust the formula.

The coming months will reveal whether India’s hardline manufacturing-first approach inspires confidence or caution. For now, the message remains clear: this market is open to business, but only to those willing to build, invest, and stay for the long haul.