Tesla’s Request To India For Reduction Of Import Duties Might Just Be Accepted

Imported vehicles that cost more than 40,000 USD attract a 100 percent import duty, whereas those under that mark only attract a 60 percent import duty

According to Reuters, the Indian government is considering a reduction in import taxes for EVs after an appeal by American EV giant Tesla a couple of weeks ago. The news was confirmed to Reuters by two senior government officials, whose identities have not been revealed as the matter is still being discussed privately.

These developments are in stark contrast to a statement made by Krishan Pal Gurjar in the Parliament over a week ago. A junior minister in the BJP government, Gurjar had confirmed that the Ministry of Heavy Industries wasn’t considering any proposal to cut import taxes on EVs. 

However, the latest developments do offer hope that Tesla’s Model 3, expected to be launched in India by the end of this year, could come in at a reduced starting price. Currently, the expected starting price of the EV is around Rs 60 lakh.

As things are right now, vehicles priced over 40,000 USD attract a 100 percent import duty, whereas those priced below that mark attract only 60 percent import duties. Those with knowledge of the matter revealed to Reuters that the government is mulling reducing the former to 60 percent and the latter to 40 percent, so that Tesla and other luxury carmakers can price their electric offerings more competitively.

It is no secret that the government wants Tesla to set up a factory in India. However, it appears as if Elon Musk wants to gauge the demand first before committing to a large investment. Nonetheless, the government still wants some degree of assured returns before it accepts Tesla’s request. 

Therefore, it is considering asking Tesla to source certain parts for its electric cars domestically. However, it remains to be seen how this strategy pans out, considering Tesla cars will come in as CBU (completely-built-up) units. 

Overall, these talks are still in their nascent stages, and a final decision will only be reached at after having involved every stakeholder in the matter. 

Source