Volkswagen joins Tesla in addressing the Indian government. Manufacturers are calling for lower import duties on electric vehicles in the country to spur demand for environmentally-friendly vehicles.
In July, Tesla sent a letter to Indian ministries asking for a reduction in import duties on electric vehicles, which would be expected to 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.
Local automakers are opposed to the government granting Tesla's request. Now, one of the largest car manufacturers in the world—Volkswagen—has joined Tesla's initiative. Lowering duties on electric vehicles even by 25% from current levels will not pose a big threat to domestic players, but will help attract investment, the head of the German automaker in India said in an interview with Reuters.
"The market for EVs has to be big enough for investments to come in and for that, we shouldn't be placing barriers," Gurpratap Boparai, managing director of Skoda Auto Volkswagen India, said. The German automaker is exploring the possibility of building electric vehicles for India from its Volkswagen and Skoda brands. However, to take this step, it must see lower import duties, stable taxation policies, long-term incentives, and the development of charging infrastructure.
"Establishing EVs is a lot of hard work. Not really having a clear roadmap and not reducing duties will slow progress towards EVs—both adoption as well as manufacturing," said Boparai.
"I'm not at all saying that local manufacturing should not be encouraged...but duty of 60% and 100% is prohibitively high at this juncture," he said, adding that to manufacture EVs locally, there first needs to be more demand.
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