Blow to Tesla: India unwilling to cut EV import tax
The Indian government has revealed that it has no plans to reduce taxes on imported electric vehicles (EVs), which could impact Tesla's entry into the market. Minister Som Parkash, stated in Parliament, "Presently, there is no proposal either to provide an exemption from local value addition cost or to provide a subsidy on the import duty on electric vehicles in India." This decision aligns with the Centre's "Make-in-India" initiative, which encourages both local and foreign investment in the EV industry.
Make-in-India push and incentive programs
In 2021, India launched a $3.1 billion incentive program to boost local EV manufacturing and a $2 billion program for companies looking to build batteries in the country. This development comes as a surprise, as the government was working on a policy that would allow global firms to import electric cars at lower tax rates if they committed to manufacturing in India eventually. The ongoing negotiations between Tesla and India might hit another roadblock due to this decision.
Tesla and India's ongoing negotiations
Previously, Tesla and India were stuck in a year-long impasse. This was because the Modi administration was pushing for local production and Tesla was seeking lower taxes for selling competitively priced vehicles built elsewhere. Although talks resumed and CEO Elon Musk mentioned a "significant investment" in India, these plans could now face delays. The two parties were reportedly close to a deal that involved selling Tesla cars in India from next year and setting up a factory within two years.
Tata Motors opposed lowering of import fee
On a related note, Tata Motors has requested the Centre not to lower import taxes (of 100%) on EVs, and to safeguard the domestic industry and its investors. Tata has claimed that such a move would be contrary to the government's Make-in-India push.
