India has increased taxes on cars and motorcycles brought into the country as part of Prime Minister Narendra Modi's “Make In India” initiative ahead of the 2024 elections. Imported cars priced under $40,000 will now be subject to a 70% tax rate, up from 60% previously.
Meanwhile, the taxes on semi-knocked-down vehicles, which have major components imported before final assembly in India, will rise from 30% to 35%. These tax hikes will take effect starting April 1st.
India's recent decision to impose a 70% tax on fully-built electric vehicles (EVs) with a value over $40,000 has sparked concern from luxury car manufacturers Lexus and Mercedes-Benz.
Naveen Soni, the president of Lexus India, stated that the company may have to adjust the prices of certain models and is waiting for clarification on the overall impact. Meanwhile, Santosh Iyer, the CEO of Mercedes-Benz India, has urged the government to reconsider the tax hike to boost the demand for EVs and support the country's vision of a green mobility ecosystem.
India already has some of the highest import taxes on vehicles, which was one of the reasons why Tesla CEO Elon Musk announced last year that the electric automaker wouldn't launch in India due to the tariffs.