The newly implemented electric vehicle policy of India puts restrictions on charging infrastructure investment to obtain tariff benefits according to confidential government documents released to public view. The new policy positions EV production facilities by domestic companies ahead of charging infrastructure expansion.

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Automakers must invest USD 500 million in Indian facilities to qualify for the reduced import taxes under the policy while charging infrastructure investment that can receive this benefit does not exceed 5% of total factory commitments. The stated limitation in a draft available to Reuters could prevent major domestic investments in India's basic charging infrastructure.

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The Indian government wants to promote homegrown manufacturing instead of focusing only on charging infrastructure increases. An industry expert explains that New Delhi is taking this step to encourage companies toward manufacturing and beyond establishing charging networks.

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The Indian EV market remains hindered by its sparse charging infrastructure and faces obstacles as a result of range-based fears. The January 2025 draft document sets limits on charging infrastructure expenditure at (a) maximum 5% of the committed investment.

Automakers along with stakeholders are undergoing government consultations about draft rules that should receive finalisation within the next month. Tesla aims to set up showrooms across India while looking for a "charging developer" to determine locations because charging stations remain crucial for its India operations.

Automobile manufacturers need to meet strict requirements involving turnover levels to obtain tariff exemptions under the new regulations. Automotive companies need to generate a minimum revenue of USD 577 million in the fourth year and hit USD 866 million in the fifth year of their operating cycle. The automotive industry will face penal charges if it does not reach these targets.

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Other automobile manufacturers including Hyundai and Toyota have shown interest in launching electric vehicle production in India despite delay issues faced by Tesla. The government's policy aims to balance the need for infrastructure development with the imperative to establish a robust domestic EV manufacturing base.