Companies like Mercedes and Skoda will make electric cars in India; Tesla took a U-turn on making EV

According to the Ministry of Heavy Industries, Elon Musk's company Tesla is showing interest in opening showrooms instead of making electric cars in India. At the same time, automobile companies like Mercedes, Volkswagen, Skoda, Hyundai, and Kia have expressed their desire to make electric cars in India. These companies have also held a meeting with the officials of the ministry.

The Ministry of Heavy Industries on Monday notified the scheme related to electric car manufacturing, intending to encourage the manufacture of electric cars in the country.

Companies wishing to manufacture electric cars in India will be able to apply under this scheme. The process for application process will begin in June. Heavy Industries Minister HD Kumaraswamy indicated that firms making an application under this scheme can import electric cars from overseas and sell them in Indian markets for five years from the time the investment is approved. 

They would be subject to paying just 15 percent duty on this import. A minimum price of the vehicle must be $35,000, and the endorsed company can import up to 8000 electric cars per year. Currently, a duty of 75 percent is levied on the import of electric cars.

In this way, the company will get the benefit of Rs 6484 crore in import duty in five years. But to avail this benefit, they will have to invest at least Rs 4150 crore in three years for manufacturing electric cars in India. Companies can also spend a maximum of five percent of this amount on setting up charging stations.

In the first three years, they will have to add at least 25 percent value to the electric car, and in the next five years, the limit of value addition will have to be increased to 50 percent. To avail the scheme, the company will also have to provide a bank guarantee of Rs 4150 crore. So if they do not manufacture after taking advantage of the import duty, then the government will confiscate this amount.

The value of land has not been included in the investment of Rs 4150 crore. Kumaraswamy said that Tesla is no longer showing interest in manufacturing electric cars in India, and no inquiry has been made from their side regarding electric car manufacturing. While other companies are in touch with the ministry.

He said that interested companies can start manufacturing electric cars in India in the next two years. This will create an ecosystem for manufacturing electric cars in the country. Currently, the share of electric cars in India's total car sales is only two percent. The government is going to install 72,000 charging stations by next March.