India (Commonwealth) _ In response to a request from Tesla, which is considering entering the domestic market, India is mulling a new electric car policy that would decrease import levies for automakers that commit to some local production, reliable sources said.
The idea under discussion might allow manufacturers to import fully-built EVs into India for as little as 15% tax, compared to the current 100% duty on cars costing more than $40,000 and 70% on the rest. In the United States, for example, Tesla’s best-selling Model Y starts at $47,740 before tax credits.
According to an official acquainted with the situation, there is agreement with Tesla’s concept, and the government is intrigued. The Indian trade ministry, which is working on the notion, and Tesla did not respond to requests for comment. When asked about the move, Finance Minister Nirmala Sitharaman told reporters, “I have no proposal to lower import duties on electric vehicles in front of me.”
If such a regulation is implemented, it might result in a significant drop in the cost of imported EVs, something domestic automakers have been eager to avoid. It may also allow global manufacturers other than Tesla to enter the world’s third-largest automobile market, where EV sales are less than 2% of total car sales but expanding quickly.
According to a third source, decreasing import duties might let Tesla sell its whole model lineup in India, rather than simply the new car it intends to build locally. On the media story, shares of Tata Motors, India’s largest electric car maker, sank about 3%, while competitor Mahindra and Mahindra lost more than 2%, bringing the benchmark auto index to an intra-day low with losses of 1.1%.
According to an Indian official, New Delhi would take its time reviewing the policy suggestion because any reduction in taxes on imported EVs might disrupt the market and upset domestic firms like Tata and Mahindra, which are investing to produce electric cars in India.
Even though the government is eager to acquire Tesla, this will require much debate. According to the official, this is due to the influence on domestic players. According to two of the sources, the policy is still in the early phases of development, and the ultimate tax rate may alter.
Other governments have used similar policies to encourage EV production commitments. For EV producers contemplating investments, Indonesia, for example, has promised to decrease import taxes from 50% to zero, a move perceived as intended at wooing Chinese players like Tesla.
Tesla attempted to enter India for the first time in 2021 by lobbying officials to reduce the 100% import tariff on EVs. Last year, discussions between Tesla and the Indian government broke down after authorities stated that the business would have to commit to local manufacture first.
Tesla has recently informed Indian officials that it wishes to establish a local manufacturing and produce a new EV at around $24,000, roughly 25% less than its current entry model, for both the Indian market and export.
Rohan Patel, Tesla’s senior public policy and business development officer, has visited with key authorities privately in recent weeks. Prime Minister Narendra Modi, who met with CEO Elon Musk in June, has been closely monitoring progress, according to international media.
According to the sources, Indian officials signaled that there will be no special benefits for Tesla’s market debut, while Tesla presented a plan for a reduced import tax, conditioned on a manufacturing commitment, to keep all parties pleased. According to one of the individuals, Tesla told Indian officials that a possible India facility might be fully operational by 2030.
Outside of the United States, Tesla now operates two factories: one in Shanghai, China, and one outside of Berlin, Germany. It is constructing a new facility in Mexico that will focus on a new mass-market EV platform that Musk claims would reduce customer prices.
