VinFast walks Tesla route in India, seeks import duty cut for electric cars

Vietnamese electric vehicle (EV) manufacturer VinFast has approached the Indian government with a request to temporarily reduce import duties on its cars for approximately two years, a report by Reuters stated. This move aims to facilitate customer acceptance of VinFast's products until the company's local manufacturing plant becomes operational.

The request aligns with VinFast's strategy to establish a presence in India, similar to the approach taken by American EV giant Tesla, which had also expressed interest in a duty reduction but faced a denial from the Indian government.

VinFast is currently in the process of constructing a manufacturing facility in the southern state of Tamil Nadu. The company's India CEO, Pham Sanh Chau, has indicated that production is slated to commence by mid-2023, initially focusing on domestic sales before venturing into exports. VinFast's investment plans in Tamil Nadu, in collaboration with the state government, entail a total investment of up to $2 billion, with an initial commitment of $500 million for the first five years of operations.

VinFast, akin to Tesla, has urged the Indian government to reconsider the 100% import duty on fully-built EVs, a stance that has been met with opposition from domestic automakers. While India, as the world's third-largest vehicle market, is contemplating the requests, no definitive decision has been reached yet, as per a government official.

Chau highlighted VinFast's proposal for a temporary reduction in import duty, suggesting bringing it down to 70% to 80% for a limited number of cars over two years. This approach, he believes, will help Indian customers acclimatise to VinFast's offerings. While the central government deliberates on this proposal, VinFast remains committed to advancing its manufacturing facility's construction.

India's EV market is still nascent, accounting for just about 2% of total car sales in the previous year. However, the federal government has set an ambitious target of achieving a 30% market share for EVs by 2030, and is actively working on programs to attract EV manufacturers.

VinFast's Tamil Nadu project is expected to have an annual capacity of up to 150,000 vehicles, complementing its main plant in Vietnam with a capacity of 250,000 vehicles annually. The company is already collaborating with around 55 Indian dealers to establish a robust sales network and is also considering introducing its two-wheeler models in the country in the future.