Maharashtra has withdrawn its proposal to impose a 6% sales tax on electric cars priced above $35,000 (about Rs 30 lakh) to encourage sales of electric vehicles in the country, the world’s third-largest auto market, which is still in its infancy.
“We are suppressing (electric vehicles in the luxury segment) for no reason… We will not continue to do this,” Chief Minister Devendra Fadnavis told lawmakers in the state Assembly on Wednesday.
India’s EV market is small, accounting for only about 2% of total vehicle sales of 4 million units last year, as concerns about rising prices and a shortage of charging stations have hampered adoption. The federal government hopes to increase this to 30% by 2030.
The overturn of the proposal, made weeks ago, comes as global electric car giant Tesla prepares to sell cars in India, where it will compete with local rivals such as Mahindra & Mahindra and Tata Motors.
Mahindra and Tata already manufacture electric vehicles in Maharashtra. The state has also attracted investment from Hyundai Motor and Toyota Motor in new factories, including an electric vehicle plant.
Fadnavis added that the new manufacturing facility will help Maharashtra become the electric vehicle capital of the country.
Maharashtra is one of India’s richest states and accounts for more than 10% of the country’s total car and electric vehicle sales. It also has a separate electric vehicle manufacturing policy aimed at incentivizing companies to produce cars in the state.
© Thomson Reuters 2025
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