India’s government is considering a significant reduction in import tax for electric cars, if the manufacturer commits to local production. Apparently, Tesla is pushing for the move in
New Delhi.
Specifically, carmakers that also produce in India could import ready-built electric cars to India at a reduced tax rate of 15 per cent, compared to the current 100 per cent for vehicles with a price tag of more than 40,000 dollars and 70 per cent for other cars. Tesla has been considering building an EV factory in India for years and has recently resumed negotiations with the Indian government.
However, the lower import taxes could allow Tesla to sell its entire model range in India, not just locally manufactured vehicles. As mentioned before, Tesla has been looking to set up shop in India since late 2020, saying that it would build an electric car there with a price tag of less than 24,000 dollars.
This is reported by the news agency Reuters, citing people with direct knowledge of the deliberations. The Indian government has yet to officially confirm that it is working on such a plan with Tesla. India’s Finance Minister Nirmala Sitharaman told the news agency that “there is no proposal in front of me.” At the same time, an unnamed official said: “There is an understanding with Tesla’s proposal, and the government is showing interest.”
Reuters notes that local manufacturers would not be happy about the deal. India is the third largest car market, and lowering import tax would invite much fiercer competition – and not just from Tesla, as the agreement would apply to all global EV makers.
Other countries have taken a similar path. Indonesia, for example. Since the end of March, the government offers EV subsidies – but only if the manufacturer has a factory in the
country and meets specific local requirements. At the beginning of the year, it became known that Tesla is looking to set up an EV factory there as well – and could produce as many as one million EVs in Indonesia per year.
