The Indian government is actively trying to make it easier for Elon Musk’s Tesla to enter the country. They want to have all the required approvals ready by January 2024. A meeting led by the Prime Minister’s Office recently looked at the future of electric vehicle manufacturing in India, which includes Tesla’s investment plans, as reported by ET.
Although the meeting mainly focused on general policy matters, it stressed the importance of speeding up approvals for Tesla’s proposed investment in India, according to a top official. Ministries, including commerce and industry, heavy industry, and electronics and IT, have been discussing Tesla’s plans following a meeting between Tesla CEO Elon Musk and Indian Prime Minister Narendra Modi during a state visit to the United States in June. It’s noteworthy that India has invited US President Joe Biden to be the chief guest for the Republic Day celebrations on January 26.
Senior Tesla executives have been in talks with the Indian government about establishing car and battery manufacturing facilities in India. Tesla has also shown interest in bringing its supply chain operations to the country.
Government departments are working to resolve any disagreements with Tesla to speed up the announcement of the company’s manufacturing plant in India, as another official informed the financial newspaper. The government is keen on facilitating Tesla’s entry into India.
One significant issue has been the import duty structure. Tesla had asked for a 40% import duty on fully assembled electric cars, which is lower than the current rates of 60% for vehicles priced under $40,000 and 100% for those priced higher.
Tesla is asking for a 40% import tax on fully assembled electric cars to set them apart as electric, not luxury vehicles. Currently, India treats electric and gasoline-powered cars the same in terms of customs duties, which means there are high taxes to encourage local manufacturing.
The American electric vehicle company wants to sell cars in India first, even before setting up a local manufacturing facility.
To solve this problem, they are thinking about creating a new import policy category that would result in lower taxes for eco-friendly vehicles. Officials want to make it clear that this potential benefit won’t only apply to Tesla but to any company committed to starting electric vehicle manufacturing in India.
Tesla had previously given up on its plans for India because there was no progress in reducing import duties. The Indian government had insisted that Tesla had to commit to making their cars locally as a condition for getting lower import taxes. They also suggested that Tesla could apply for the production-linked incentive scheme, which provides direct subsidies to manufacturers instead of tax concessions.
