India considers lowering EV import tariffs to attract Tesla
The Indian government is contemplating Tesla's proposal to reduce import tariffs on electric vehicles (EVs) to 15%, potentially accelerating its entry into the nation, the Financial Times has reported. This development comes as Tesla investigates the possibility of establishing a manufacturing facility in India, and coincides with reports that the company intends to produce its most affordable electric car yet at its German plant.
Tesla requested for initial import tariff concession
Tesla has sought a tariff reduction to counterbalance the high customs duty of 70% for importing completely built unit (CBU) cars valued under $40,000 (Rs. 33.31 lakh), and 100% for cars valued at $40,000 or more. A government official was quoted as saying that Tesla's stance has consistently been that they require some tariff concessions as a prerequisite for constructing a plant in India.
Government's stance on Tesla's request
Initially, the government claimed it had no plans to grant Tesla any unique concessions. However, recent developments indicate that the lowered tariffs would benefit not only Tesla but also other automakers importing electric vehicles into India via the CBU route. One official of the proposed EV scheme reportedly stated, "We want to create a package which is good for India and which doesn't become a curated package for one company. Others are free to take advantage of this window."
Impact on the EV maker's India business ambitions
The potential decrease in import tariffs could prompt Tesla to hasten its plans for establishing a manufacturing facility in India. This news comes as reports suggest that Tesla has reconsidered its decision to build its most affordable EV in India, now choosing Germany instead. The new car, priced at approximately $27,000, will be a more economical version of the Tesla Model 3 sedan.
Tesla's foray into India is a risky endeavor
Piyush Goyal, India's commerce minister, is scheduled to journey to San Francisco in the upcoming week to participate in meetings related to the Indo-Pacific Economic Framework for Prosperity. An Indian official mentioned the possibility of Goyal meeting Elon Musk during the visit. India's electric vehicle market is in its early phases, primarily centered on two-wheeled vehicles. Any automobile entering this market would need to be competitively priced to gain traction.
