India mulls lowering import tax for Tesla, other EV makers
India is contemplating a new electric vehicle (EV) policy that could significantly reduce import taxes for automakers like Tesla if they commit to local manufacturing. The proposed policy could lower the tax rate to as low as 15% for fully-built EV imports, a significant decrease from the current rates of 100% for cars costing above $40,000 and 70% for the rest. Tesla has been trying to get India's import taxes down since 2021.
The new policy could affect local carmakers
The new policy could affect Indian carmakers, such as Tata Motors and Mahindra, adversely. According to Reuters, Indian officials fear that reduced taxes on imported EVs could disrupt the market and negatively impact the investments made by local players in the EV market. The government is keen on Tesla coming to India but it is expected to proceed cautiously in considering the policy to avoid upsetting domestic automakers.
Tesla plans to manufacture a cheaper model in India
Tesla's previous attempts to enter the Indian market were unsuccessful due to disagreements over import tax reductions and local manufacturing commitments. However, the company has recently expressed interest in setting up a local factory and producing a new, more affordable EV model priced around $24,000 for both the Indian market and export purposes. Talks between Tesla and Indian officials have increased over the past few months.
Tesla could set up a factory by 2030
Countries like Indonesia have implemented similar policies to attract EV manufacturers, offering reduced import duties for those planning investments. If Tesla enters the Indian market, it could potentially see a local factory operating at full capacity by 2030.
