This relaxation only applies to premium EVs priced at over $35,000 and requires investments totaling nearly $500 million and long-term plans to set up local manufacturing.
The EV policy represents a targeted move to appeal to Tesla's business interests, signaling India's readiness to support EV manufacturing, Ammar Master, a South Asia director of Automotive at GlobalData, told CNBC.
"The Indian government has been proactive in its attempts to lure Tesla into establishing its manufacturing base in India," he said.
The automaker, however, faces several headwinds to breaking into the world's third-largest auto market.