Vinfast seeks import duty reduction in India to boost EV adoption

Vietnamese electric vehicle manufacturer VinFast has made a request to the Indian government to consider reducing import duties on its cars for a period of approximately two years.

This request is aimed at allowing customers to become familiar with VinFast's products while the company prepares to commence operations at its local manufacturing plant in India.

VinFast's India CEO, Pham Sanh Chau, revealed this during an interview with Reuters, espressing that the company has initiated the construction of a factory in the southern state of Tamil Nadu, with production expected to begin by the middle of the following year.

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VinFast's investment plans in India have been gaining momentum, with the company and the state of Tamil Nadu recently announcing their collaboration towards an investment of up to $2 billion. As part of this agreement, VinFast intends to commit $500 million for the initial five years of the project.

Similar to Tesla, VinFast is advocating for a reduction in India's 100 per cent import duty on fully-built electric vehicles.

However, this proposal has faced opposition from domestic automakers. While the Indian government has been reviewing such requests, no decision has been made yet, according to a government official.

Pham Sanh Chau stressed the importance of reducing import duty taxes temporarily to facilitate the introduction of VinFast's products to Indian customers. He proposed a reduction to around 70 per cent to 80 per cent for a limited number of cars over a two-year period. Chau highlighted the need for customers to become accustomed to VinFast's offerings during this transitional phase.

Electric vehicles constituted a mere 2 per cent of India's total car sales last year. However, the federal government has set an ambitious target of achieving a 30 per cent market share for electric vehicles by 2030.

To support this goal, the government is actively working on initiatives to attract electric vehicle manufacturers to invest in India.

VinFast's Tamil Nadu project aims to have an annual production capacity of up to 150,000 vehicles, slightly lower than its main plant in Vietnam, which has a capacity of 250,000 vehicles per year.

Regardless of this, VinFast is optimistic about the potential of its Indian operations and is already collaborating with approximately 55 Indian dealers to establish a robust sales network. Additionally, the company is considering introducing its two-wheeler models in the Indian market at a later stage.

Pham Sanh Chau expressed VinFast's agility as a startup company, emphasising their swift progress in establishing a presence in India.

(With inputs from Reuters)