In order to boost domestic production, the Central Government may propose reducing import duties on completely produced units for businesses like Tesla in the early years, according to a report on Oct 18. The government may establish a policy framework for technologically advanced automobile producers that includes local sourcing.

According to a TOI report citing highly placed insiders, import tariff on green cars might be slashed from 100% to 15% if carmakers agree to begin work on producing their vehicles in India and sourcing components locally.

"The government will also take guarantees from the companies towards creating an ecosystem for suppliers, with around 20% of parts being sourced locally in the first two years which would go up to 40% by the fourth year," the source told TOI’s Pankaj Doval.

This policy may give Tesla, BMW, and Audi permission to build electric cars in India.

Earlier this year, ET reported that Indian officials were hesitant to provide duty cuts to Elon Musk's Tesla unless guarantees to local investment were made. The business had requested a 40% import duty on fully completed electric vehicles, as opposed to the current rate of 60% on those priced under $40,000 and 100% on those priced above that.

The current customs procedure in India does not differentiate between electric and hydrocarbon-powered vehicles and charges substantial duties to encourage domestic manufacturing.