India Wants to Look at Tesla's Roadmap in the Country Before Cutting Import Tax

India Wants to Look at Tesla's Roadmap in the Country Before Cutting Import Tax

Photo: Luke MacGregor/Bloomberg News

India wants to familiarize itself with Tesla's roadmap for development in the country before cutting taxes on imports of electric vehicles. The government is also seeking assurance that the manufacturer will increase local parts purchases.

India asked Tesla to increase local parts purchases and share detailed production plans before they consider the automaker's request for lower import taxes on electric vehicles, an informed person told Bloomberg. According to the information, the Ministry of Heavy Industry and Finance requested details of the company's development in the country during a meeting in early August. In addition, the departments also asked Tesla for their thoughts on how the import tax on fully built cars should be weighed against those cars that come in parts and are assembled afterward in India. At the moment, partially assembled cars in the country have a reduced import tax.

In June, Tesla sent a letter to Indian ministries asking for a reduction in import duties on electric vehicles, which should increase demand for them and generate revenue for the government. The California-based manufacturer said in a letter to the ministry and the country's leading think tank, Niti Aayog, that it would be more appropriate to lower federal taxes on imports of fully assembled electric vehicles to 40%. That compares with current rates of 60% for cars priced below $40,000 and 100% for those above $40,000. Tesla has also requested the removal of the 10% social security surcharge, which levies on all imported cars and helps fund health and education programs.

Tesla reportedly said at the meeting that it had purchased $100 million worth of parts from India and assumed that figure would increase after any tax breaks, an insider said. Tesla has also pledged to make significant direct investments in sales, service, and charging infrastructure. In addition, the company will appreciate the broader investment in manufacturing, but only after it fully enters the Indian market.

© 2021, Eva Fox. All rights reserved.


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About the Author

Eva Fox

Eva Fox

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.

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