Import Duty Concession Unlikely Without Local Investment Plans

Tesla To Send Team To India To Scout Locations For $2-$3 Bn EV Plant

SUMMARY

Current import duty ranges between 60% to 100%, while Tesla is asking for 40%

The developments come ahead of Prime Minister Narendra Modi’s visit to the US in June this year

The EV maker in talks with the government to procure EV components locally to set up manufacturing plant in India

It is not unknown that Tesla has been trying to enter India for some time. Like Apple, it has also been considering India to reduce its dependence on China. Yesterday (May 17), Reuters reported that Tesla is in talks with the Indian government to set up a manufacturing unit in the country for domestic sale and purchase of its electric vehicles.

But, as per latest developments, the government is not going to offer any import duty concession if the EV maker doesn’t make local investments.

As per an Economic Times report, an official aware of the matter said, “They (Tesla) have approached us.”

The current import duty on fully assembled cars ranges between 60%-100%, while Tesla has been requesting to bring it down to 40%.

The developments come ahead of Prime Minister Narendra Modi’s visit to the US in June this year.

Last year, Elon Musk criticised the Indian government for high duty on the imported EVs. Commenting on this last year, Musk said, “Tesla will not put a manufacturing plant in any location where we are not allowed first to sell and service cars.”

Following this, Ola Electric’s Bhavish Aggarwal took a dig at Musk and said, “Tesla is free to come in and put up a shop here and sell its cars. They just want to be treated differently from others, which I believe is not in the interests of India.”

However, according to reports, this issue wasn’t discussed in the meeting between Tesla and government officials yesterday. Rather, sources revealed that Tesla is in talks with the government for local procurement of components and other issues.

In the meantime, India’s EV market is on the rise. As total EV registrations in India grew to 10.2 Lakh units in 2022 from 3.3 Lakh units in 2021 and 1.2 Lakh units in 2020. Though Elon Musk has been trying to grab the opportunity for some time, the EV maker and the Indian government seem to be on different pages over several issues.

This year, in March, Minister of State (MoS) for Heavy Industries Krishan Pal Gurjar informed the Parliament that India is home to 21.7 Lakh registered EVs with Uttar Pradesh topping the list.

As per the government, Delhi had the highest number of public charging stations (PCS) in the country at 1,845, and across the country, on average each charging station caters to almost 199 EVs.

The ministry also noted that GST on EV and EV chargers have been reduced as well as exempted EVs from permit requirements.