Tesla Could Get a Reduction in Import Duties if Builds Manufacturing Plant in India, Sources Say

Tesla Could Get a Reduction in Import Duties if Builds Manufacturing Plant in India, Sources Say

Photo: Luke MacGregor/Bloomberg News

Tesla could get a tariff cut on the import of cars into India if it has a manufacturing facility in the country, government sources say.

On July 23, it became known that Tesla had sent a letter to Indian ministries asking for a significant reduction in duties on electric vehicles, which would be expected to increase demand for them and generate revenue for the government, two knowledgeable sources, who asked not to be named, told Reuters. 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.

On the same day, following this rumor, Tesla CEO Elon Musk responded to a tweet from an Indian YouTuber asking to launch car sales in the country as soon as possible. He explained that the launch is complicated by the fact that India has some of the highest import duties on cars in the world, even among the big countries. In addition, despite the government's stated climate targets, EVs are treated in the same way as diesel- and gasoline-powered cars. Undoubtedly, such an attitude prevents Tesla from fully entering India’s market.

Now a source from the Indian government said that the country may consider providing a reduction in import duties, as well as other benefits, but with some conditions. To do this, the manufacturer will have to invest in the creation of manufacturing facilities in the country, and only after that, Tesla's request will be considered, reports Navjivan India. The official also made it clear that any decision on the matter would apply to the entire sector, not just a specific company.

© 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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