Tesla's India entry stalled as local firms resist lower duties
Tesla's ambitious plans to enter the Indian market are stalled again, as the government has not yet agreed to reduce import taxes on electric vehicles (EVs). Homegrown automakers, such as Tata Motors and Mahindra, are pushing back against the US-based EV maker's demands, fearing increased competition. Rajesh Kumar Singh, a top official at the Department for Industry and Trade Promotion, stated that the issue is highly contested and no final decision has been made as of now.
Tesla demands lower import tax for initial entry
Last year, Tesla promised to invest significantly in local manufacturing in India if they were initially granted lower import taxes on electric vehicles. The company has been seeking reduced taxes due to India's high import duty on vehicles, including EVs. However, the government has not considered any such proposal. Singh noted that Tesla aims to introduce cars in India in the price range of $24,000-36,000 (approximately Rs. 20-30 lakh).
Domestic automakers oppose lower EV import tax
Indian automakers such as Tata Motors and Mahindra are resisting Tesla's request for lower import taxes. Anish Shah, Managing Director of Mahindra, emphasized the need for a level playing field between domestic and foreign EV manufacturers and the importance of supporting local production. The government is considering a policy to reduce the 100% EV import tax to as low as 15% for companies that commit to investing and manufacturing in India over time.
Tesla's entry depends on government's decision
If import taxes on EVs are not reduced, Tesla's entry into India could get delayed. CEO Elon Musk has previously criticized India's import taxes as being the highest in the world. Singh suggested that temporarily lowering the tariff could be an option but would require "cast iron commitments" from Musk to invest in India. For reference, of 40 lakh vehicles sold in India last year, only 82,000 were EVs. However, the segment experienced a 115% growth rate in 2023.
