Tesla, Inc.’s TSLA has scored a significant victory in India as the country reportedly reduces import taxes on selected electric vehicles, encouraging investments and local manufacturing. This development aligns with Tesla’s lobbying efforts, overcoming resistance from local car manufacturers, as per Reuters.

Under the new policy, qualifying companies can now import up to 8,000 EVs annually, priced at $35,000 or above, at a reduced tax rate of 15%. This contrasts sharply with the previous tax rates of up to 100% for electric vehicles, set for a five-year period, Reuters reported.

Tesla, BYD, And VinFast Eye Indian Market

India is currently imposing taxes ranging from 70% to 100% on imported EVs based on their value. In comparison, Tesla’s most affordable model, the Model 3, starting at $38,990 in New York, is facing challenges in India due to its lack of entry-level models and an aging lineup, leading to dwindling demand amidst intense competition, especially from BYD Co. BYDDY.

While Tesla navigates these challenges, Vietnam’s VinFast Auto Ltd. VFS is looking to enter the Indian market by investing $2 billion in a factory in Tamil Nadu, with aims to benefit from reduced EV import taxes, according to Reuters.

Price Action: TSLA shares are currently trading 0.57% lower at $161.57 on the last check Friday.