HSBC flags concerns over likely EV policy changes, sees disadvantage for Indian automakers

The Nifty Auto index has tanked over 17 percent in the last six months.

Global brokerage HSBC has raised concerns over the government’s reported plans to tweak India’s EV policy, saying the proposed changes could put domestic automakers at an unfair disadvantage against imported electric vehicles. The development comes amid reports that the Centre is considering lowering import duties on foreign EVs—part of a broader effort to attract Tesla to India following Prime Minister Narendra Modi’s meeting with Elon Musk in the US.

HSBC notes that the proposed 15 percent import duty on EVs is significantly lower than the 43–50 percent GST levied on comparable internal combustion engine (ICE) passenger vehicles manufactured locally, which also face an additional 13 percent road tax.

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While India currently imports only around 8,000 EVs annually, the brokerage warns that such a policy shift could create long-term investment concerns for ICE automakers, potentially impacting the broader domestic auto industry.

HSBC's note comes just a day after two other international brokerages, Nomura and CLSA, presented their views. CLSA warns that market excitement around Tesla’s India entry may be excessive. While a sub-Rs 25 lakh on-road model could help the American giant gain strong market share, the brokerage does not see its arrival significantly impacting established players like Maruti Suzuki, Hyundai, or Tata Motors. Instead, Tesla’s presence is likely to drive premiumization in India’s auto market.

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Despite the intense speculation, CLSA highlights that Tesla would need local manufacturing to scale effectively. Even with import duties below 20 percent, pricing vehicles under Rs 35-40 lakh would remain a challenge without a domestic production setup. As Tesla’s India strategy unfolds, analysts remain watchful of its next move in one of the world’s fastest-growing automobile markets.

Nomura believes India’s evolving EV policy will fast-track electric vehicle adoption, making it easier for Tesla and other global automakers to invest. The policy shift is also expected to expand India’s charging infrastructure, benefiting key suppliers like Sona Comstar, Sansera, and Motherson Sumi. However, the brokerage remains doubtful that Tesla will introduce a budget-friendly Rs 21 lakh model, as some reports have suggested.

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At about 2:40 pm, Tata Motors shares edged down 0.4 percent to Rs 665, while Maruti Suzuki gained 1 percent. M&M climbed nearly 3 percent, and Hyundai Motor India advanced 2 percent in trade. However, the Nifty Auto index traded 0.8 percent higher. The index has tanked over 17 percent in the last six months.

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