- US automaker, Tesla demands import tax breaks prior to entering the Indian market
- Import taxes incurred on EVs as high as 60% for vehicles priced under $40000 and 100% for those over $40,000
- Impact on local manufacturing concerns decision-makers
Tesla Inc. has appealed to the Prime Minister to cut back the import taxes levied on Electric Vehicles before entering the Indian market. Some of the major Indian automakers, including Tata Motors, objected to the idea stating that doing so would discourage the manufacturing of EVs in India.
Tesla wishes to kick off selling imported cars in India from this year but dreads the taxes levied in the country which is supposedly one of the highest in the world. The request for tax breaks received criticism from several local manufacturers who remark that implementing this could dissuade investment in domestic manufacturing.
Manuj Khurana, Head of Policy in India for Tesla, took the company’s bid to PM’s office last month and accentuated the fact that the taxes were way too high. In the same meet, Tesla stated that the inflated duty would not make it a “viable proposition” to do business in the country.
An import duty of 60% is levied on electric vehicles which are priced below 40,000 USD and 100% on the ones that cost over 40,000 USD. Analysts deduce that this would make Tesla cars too expensive for buyers and would not be sought after in India.
A one-on-one meeting has also been requested by Tesla between its CEO, Elon Musk, and Prime Minister Narendra Modi. A clear response has not yet been released by Tesla or the PM’s office. However, sources suggest that government officials split opinions, where some want the company to pledge to local manufacturing in advance of implementing import tax cuts.
Indian automotive manufacturing giant, Tata Motors, has lately raised $1 billion to step up local EV production. It too voices concerns over the possible threat to domestic EV manufacturing ahead of import tax breaks for EVs. Things might have been a tad bit easier if Tesla had been the sole EV manufacturer, however, there are others too.
Transport Minister, Kailash Gahlot said that Tesla should refrain from selling cars that are made-in-China in the Indian market. It should rather encourage local manufacturing. Tesla, on the contrary, wants to start by experimenting with imports initially.
Tesla CEO, Elon Musk, took to Twitter in July to declare that “if Tesla can succeed with imported vehicles then a factory in India is quite likely.”
The Indian market is still in the developmental phase for premium SUVs and charging infrastructure is scanty. Out of the 2.4 million cars that were sold in India last year, a mere 5000 were electric.
One of the government officials proposed that temporary slashing of import duties would amplify India’s “investor-friendly image and green credentials”