NEW DELHI (Reuters) – India’s Maharashtra state has withdrawn a proposal for a 6% sales tax on electric vehicles priced above $35,000 to encourage adoption at a time when EV sales are still nascent in the country – the world’s third-largest auto market.
“We are disincentivising (EVs in the luxury segment) without any reason … we will not go ahead with this,” Devendra Fadnavis, chief minister of the western state, home to India’s financial hub Mumbai, told lawmakers in the state assembly on Wednesday.
India’s EV market is small, making up about 2% of total car sales of 4 million last year, as worries related to higher pricing and inadequate charging points weigh on adoption. The federal government wants to increase this to 30% by 2030.
A reversal of the proposal, made weeks earlier, comes as global EV giant Tesla is gearing up to sell cars in India where it will compete with homegrown rivals such as Mahindra & Mahindra and Tata Motors.
Mahindra and Tata already manufacture EVs in Maharashtra. The state has also attracted investment in new factories, including for EVs, from Hyundai Motor and Toyota Motor.
The new manufacturing facilities will help Maharashtra become the national capital of electric vehicles, Fadnavis added.
Maharashtra, one of India’s wealthiest states, accounts for more than 10% of total car and EV sales in the country. It also has a separate EV manufacturing policy designed to give incentives to companies to build the cars in the state.
($1 = 85.7150 Indian rupees)
(Reporting by Hritam Mukherjee, additional reporting by Vijay Malkar in Bengaluru; Editing by Sharon Singleton)
