Vietnam's VinFast seeks India EV import duty cut as plant construction starts

Thoothukudi: Vietnamese electric vehicle maker VinFast has asked India to reduce import duties on its cars for about two years so customers can get familiar with its products while a local manufacturing plant comes on stream, an executive said on Sunday.

VinFast has started building a factory in the southern state of Tamil Nadu and hopes to start production by the middle of next year, for domestic sales first and then exports, its India CEO Pham Sanh Chau told Reuters.

VinFast and Tamil Nadu said last month they have agreed to work toward an investment of up to $2 billion (Rs 16,576 crore), with an intended commitment of $500 million (Rs 4,144 crore) for the first five years of the project.

Like Tesla, VinFast has also asked for a reduction to India's 100% import duty on fully-built EVs, which has been opposed by domestic automakers. India, the world's third-largest vehicle market, has been considering the requests but has not made a decision, a government official said last month.

A government spokesperson did not immediately respond to a request for comment.

"We ... proposed a reduction of import duty tax ... for instance by bringing it to 70 per cent to 80 per cent just for two years and for a very limited a number of cars in order for the customers to get used to our products," Pham Sanh Chau said at the sidelines of VinFast's groundbreaking ceremony in Thoothukudi district.

"The central government is still considering it. But while waiting for the final decision of the central government, we move ahead with our construction of the manufacturing facility."

Electric models accounted for just about 2 per cent of India's car sales last year, but the federal government is targeting 30 per cent by 2030 and is working on a programme to attract EV makers.

The Tamil Nadu project would have a capacity of up to 1,50,000 vehicles annually, compared with 2,50,000 at its main plant in Vietnam, according to VinFast.

Pham Sanh Chau, a former Vietnam ambassador to India, said the company is already closely working with some 55 Indian dealers to have a sales network and could also look to later sell its two-wheeler models in the country.

"As a startup company, we move fast," he said.