Shares of Tata Motors, Mahindra and Mahindra and Hyundai Motor India fell up to 6 percent on February 21 following reports that the government may ease EV import rules, paving the way for foreign players. This is said to intensify competition for Indian automakers.
M&M shares saw their biggest single-day fall in nearly 7 months to Rs 2,653. Tata Motors share were trading at Rs 676 lower by 2 percent while Hyundai Motor India slipped 2.5 percent at Rs 1,875.
The development gains significance as Tesla Inc has already accelerated efforts to sell cars in the country. Moneycontrol has learnt that Elon Musk’s Tesla Inc is likely to enter the Indian market through direct imports, rather than committing to local manufacturing in the immediate future.
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To facilitate Tesla’s India entry, the government is also considering lowering import duties for EVs, along with a broader relaxation of EV import norms. Further duty relief could be on the table to attract leading global EV players. The readiness to reduce import duty on EVs indicates a potential shift in policy to attract foreign players and increase India’s presence in the global supply chain.
However, Geojit Financial has been quick to allay fears by suggesting that Tesla may not be able to match M&M in terms of pricing, distribution and services.
The Basic Customs Duty (BCD) on fully built EVs priced above $40,000 has been reduced to 70 percent. However, an additional 40 percent of the Agriculture Infrastructure and Development Cess (AIDC) has been introduced. The 10 percent Social Welfare Surcharge (SWS) has been exempted, resulting in an effective import duty of 110 percent for EVs above this price point. For EVs that cost less than $40,000, the import duty remains at 70 percent.
Also read: Private sector activity rises to six-month high of 60.6 in February
As a result, at about 11 am, the Nifty Auto index was down 2.5 percent at 21,534. Tata Motors, M&M, Hyundai Motor India, Maruti Suzuki and Bajaj Auto were the top gainers and major contributors. The Nifty Auto index has tanked almost 6 percent since the start of the year.
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