The US-based electric vehicle (EV) manufacturer, Tesla, is in discussions with the Indian government to secure initial tax concessions on customs duties for electric vehicles (EVs). If approved, this move could result in a significant reduction of import duties, benefiting all EV manufacturers in India.
Currently, India imposes a 70 percent custom duty on cars priced under $40,000 (approximately Rs 32.5 lakh) and a 100 percent duty on cars exceeding this threshold. Tesla is seeking a reduction of at least 15 percent in these import duties.
The appeal, which is under consideration by the government, could mark a pivotal moment for the EV industry in India. Earlier this year, Tesla leased office space in Pune following Prime Minister Narendra Modi’s visit to the United States, where he met with Tesla’s CEO, Elon Musk.
As global competitors like BYD and Great Wall Motors from China face scrutiny and challenges in India, Tesla’s entry into the Indian market is strategically advantageous. Notably, the Chinese automakers faced obstacles in making their $1 billion investments in the country due to stricter approval requirements following the 2020 Indo-China border conflict.
In addition to discussions about establishing an EV manufacturing facility in India, Tesla has also expressed interest in setting up a battery and storage facility in the country. These developments signify the growing importance of India as a key market for electric vehicles.
Union Commerce and Industries Minister Piyush Goyal is scheduled to meet with Elon Musk during his visit to the United States between November 13 and November 17.
The outcome of their discussions and whether the government will agree to reduce import duties to facilitate Tesla’s entry into the Indian market remains to be seen. This potential collaboration could have a significant impact on the future of EVs in India.