Government May Cut Import Duty If Tesla Makes EVs In India: Report

The Indian government is ready to take a fresh look at lowering import duty provided Tesla decides to manufacture electric vehicles in India. Citing a government official, ET reported that the centre is open to considering reducing taxes and other incentives for the EV maker if the brand agrees to manufacture its cars in the country. The EV maker recently lobbied the Indian government to reduce import duties on electric vehicles. In a letter to the Indian ministries, the company has reportedly urged the centre to reduce import taxes on fully assembled EVs to 40 per cent against 60 per cent for cars priced below $40,000 and 100 per cent for cars priced above $40,000.

Also Read: Elon Musk Wants To Bring Tesla To India But Custom Duties Are An Issue​

Tesla aims to begin the sale of its electric vehicles in India this year, possibly with the Model 3

The California-based EV maker also said this move will boost demand and generate more revenue for the government. Last week, Tesla founder Elon Musk said that the company wants to launch electric vehicles in India, but high import rates are pushing back its entry.

We want to do so, but import duties are the highest in the world by far of any large country!

Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India.

— Elon Musk (@elonmusk) July 23, 2021

Replying to a query on Twitter that asked Musk to bring Tesla cars in India, the Tesla CEO replied that he wanted to bring the brand to India, but custom duties are a challenge. He said, "We want to do so, but import duties are the highest in the world by far of any large country! Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India."

If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely.

— Elon Musk (@elonmusk) July 23, 2021

"If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely," Musk tweeted on the same thread. Tesla has been looking at India as a potential spot for a gigafactory or a battery facility, however, it is biggest challenge to be successful in India is the anaemic infrastructure for EVs.

Also Read: Tesla Lobbies India For Sharply Lower Import Taxes On Electric Vehicles: Report​

The Indian government is also in talks with large global companies to set up manufacturing facilities in the country. The centre has reduced the goods and services tax (GST) on EVs to 5 per cent from 12 per cent. Moreover, the GST on chargers and charging stations for EVs has been lowered from 18 per cent to 5 per cent.

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