Aaditya Thackeray Champions Tesla's Cause, Writes To FM Nirmala Sitharaman

While most of Elon Musk's overtures towards the Indian government have been shrugged off, the world's richest man has found a key ally, in his bid to get sales of his electric car company started in India. That's Aditya Thackeray, the son of Maharashtra chief minister Uddhav Thackeray. Thackeray himself is the minister for tourism and environment in Maharastra and recently he wrote a letter to finance minister Nirmala Sitaraman on the expectation for the upcoming union budget for 2022-2023 which will be presented next month. 

Thackeray suggests that the center should lower import duties for all-electric car makers. "Pioneering companies like Tesla, Rivian, Audi, BMW among many others must be given a time-bound concessionary customs rate for the import of vehicles for retail sale. This will drive the aspiration value in the market, boost investment in our supply chain and encourage the startup ecosystem to follow the lead of such companies," he writes. 

He claims that the concessionary rate could be for a maximum of 3 years or could be defined to a certain limit of units for a foreign company that wants to sell EVs or components of global standard. He adds these concessions should be granted against a fixed investment guarantee in India's auto supply chain or charging infrastructure. 

"A mere high import duty only adds to the burden of the customer and does not lay the ground for any industry investment as custom revenues are not directly used for sectoral investments," he explained. 

Tesla has been seeking a reduction in import duties since it incorporated its Indian entity in 2021. In August last year Musk claimed that the "import duties in India are the highest in the world by far of any large country." Musk again tweeted about “challenges” his company faced with the Indian government last week. 

Indian law stipulates a 60 percent import duty on fully imported cars that cost less than $40,000 inclusive of cost, insurance, and freight. If the overall cost is higher than $40,000 then there is 100 percent duty. Tesla's most affordable car right now - the Model 3 - currently starts at around $40,000 without taxes in the US, which means with just the addition of the freight cost, that figure will be higher than the $40,000 mark and that will make it liable for 100 percent duties in India if imported. 

Tesla has been non-committal about local manufacturing and has rather been seeking to import its vehicles from the Shanghai gigafactory.  Tesla has plenty of capacity — it already has three gigafactories active in North America, Europe, and China, with another one coming up in the US in the state of Texas.