The Indian government has begun discussing tax cuts on imported cars following Tesla's recent appeal. The manufacturer wants to be able to study the demand in the country before starting the construction of a manufacturing plant there.
India is considering lowering import duties on electric vehicles, two senior government officials told Reuters. This came after Tesla began lobbying the government on the issue in July. For imported electric vehicles under $40,000–including the car's cost, insurance, and freight—the government is discussing cutting the tax rate to 40% from 60%, officials said. For electric vehicles worth more than $40,000, they plan to reduce the rate from 100% to 60%. "We haven't firmed up the reduction in duties yet, but there are discussions that are ongoing," one of the officials said.
While the tax cut has sparked heated debate among manufacturers in India, the government is in favor of a cut if it sees companies like Tesla bringing some benefit to the national economy, one official said. "Reducing import duties is not a problem as not many EVs are imported in the country. But we need some economic gain out of that. We also have to balance the concerns of the domestic players," the official said.
Another official told that since the duty cut is only considered for electric vehicles and not for other categories of imported vehicles, this should not be a concern for domestic automakers, which mainly produce affordable gasoline-powered vehicles. India's Ministry of Finance and Trade and its federal think tank Niti Aayog are discussing the proposal and all stakeholders will be consulted, he added.
A third source familiar with the government's opinion said India had an understanding that a brand like Tesla could make EVs more affordable. This is what can bring the country out of its lagging positions in the production and sales of electric vehicles, to the forefront. The government is thinking about the best way to approach this, and they want to see some benefit, even if it only means Tesla's promise to buy parts domestically, the person said.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.