In a bid to attract global electric vehicle (EV) manufacturers into the Indian market and set up local manufacturing facilities, the Indian government has approved a new policy that will cut import taxes.

Key to the new policy is the lowering of import taxes on certain electric vehicles for companies committing to invest at least $500m in the country. These manufacturers will have three years to establish local EV manufacturing facilities and start commercial production, with at least 25% of components sourced domestically, increasing to 50% by the fifth year.

India currently levies a tax of 70–100% on imported cars depending on their value. EV manufacturers who now invest in EV manufacturing in the country will be allowed to import 8,000 EVs a year at a 15% import duty for five years on cars costing $35,000 and above.

India’s Ministry of Heavy Industries said that this policy will provide “Indian consumers with access to the latest technology, boost the Make in India initiative, strengthen...