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Critical Topics and Their Significance for the UPSC CSE Examination on June 04, 2025

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India’s new EV policy

For Preliminary Examination:  Current events of national and international significance

For Mains Examination: GS III - Science and Technology

Context:

Electric Vehicle (EV) major Tesla is not interested in manufacturing in India but is looking at opening two stores, Union Heavy Industries Minister H D Kumaraswamy said on Monday.

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EV's regenerative braking

India’s new EV policy

Key takeaways:

• When the Indian government unveiled its electric vehicle (EV) scheme in March 2024, just ahead of the Lok Sabha elections, expectations were high that Elon Musk would visit India and commit over $2 billion to set up a Tesla manufacturing facility. However, Musk canceled the trip, citing pressing responsibilities at Tesla. Interestingly, shortly after postponing his India visit, Musk traveled to China, which is Tesla’s second-largest market.

• In February, shortly after Prime Minister Narendra Modi’s meeting with Elon Musk in Washington, Tesla posted 13 job openings in India. These roles included positions such as store manager, service advisor, customer engagement manager, and business operations analyst.

• According to the Global Trade Research Initiative (GTRI), although the launch of the EV scheme’s guidelines is a positive development, the journey to market-ready EVs will take time. The application process is yet to begin and is expected shortly. GTRI notes that it could take at least another six months to finalize participating companies. Until then, approved manufacturers are permitted to import fully assembled EVs at a reduced customs duty of 15%.

• Companies like Mercedes-Benz, Hyundai, Kia, and Volkswagen-Škoda have already expressed interest in the scheme. However, Tesla may not be joining them. At a media interaction, Kumaraswamy noted that Tesla plans to open two showrooms in India but does not appear interested in local manufacturing.

• Former U.S. President Donald Trump criticized Tesla's potential expansion in India in February, calling it unfair to the United States. He remarked that while building a factory in India is permissible, it disadvantages American interests. Trump has echoed similar concerns about Apple’s growth in the Indian market.

• On Monday, India’s heavy industries ministry released detailed guidelines for the EV manufacturing scheme and will soon open the online application process. The scheme mandates a minimum investment of ₹4,150 crore from approved applicants, with specific targets for domestic value addition.

• In return, selected companies can annually import up to 8,000 completely built electric vehicles priced at $35,000 or more, benefiting from a reduced import duty of 15% for five years. The scheme is designed for global automotive manufacturers with annual revenues exceeding ₹10,000 crore and fixed assets worth at least ₹3,000 crore.

India’s New EV Policy

India has introduced a new EV manufacturing policy aimed at attracting global electric carmakers to set up local production facilities while offering short-term import benefits as a