Tesla In India: Centre Not Willing To Extend Special Incentives, States Free To Do So

While US-based electric car manufacturer Tesla has renewed its interest in entering the Indian market, the Union government is reportedly said to be not willing to extend any special incentives to the carmaker as of now. However, the states are free to offer concessions to increase competitiveness.

Further, the Centre is not too keen on making special accommodations for the highest-valued carmaker in the world, the ET reported citing sources.

Talking about extending incentives to the firms, the sources said to the publication, “The government is not looking at any tailored incentives as of now. States are a different matter. States might compete with each other and someone might give them (concessions)”.

They also said that Tesla is talking about building a complete supply chain in the long run, similar to what Apple has done in recent times.

To recap, Tesla’s executives landed in India in mid-May this year to discuss a potential entry into the market. The carmaker’s executives are said to have met various relevant departments, including officials from the heavy industries and commerce ministries.

Per government sources, India has made it clear that imports are not preferred, though Tesla has been talking big in terms of complete supply chains going through India.

Over recent years, the US carmaker and the Indian government have been at loggerheads with each other. In 2021, Tesla demanded a reduction in import duties on EVs in India, which the government promptly denied. Last year, CEO Elon Musk also criticised the Indian government over the high import duties on EVs.

He urged the government to slash the taxes, which currently are in the range of 60%-100% depending on the Cost, Insurance and Freight (CIF) value of the fully imported cars.

Tesla’s U-Turn

Since May, the Elon Musk-led carmaker has been increasingly showing interest in entering the Indian market, either via the import market or manufacturing in India. However, talks have been more focussed on manufacturing in India, as the Centre does not prefer imports as a point of access for Tesla.

Inc42 also reported about how Tesla is ‘serious’ about setting up production and an innovation centre in the country.

Per MoS IT Rajeev Chandrasekhar, during the meeting with Tesla, India has signalled to the officials that the government is working together and will ‘certainly’ offer facilities to enable them to achieve whatever ambitions Tesla has about India. 

In addition to the plans of setting up a manufacturing plant in India, Elon Musk is also considering procurement of local components. According to a Reuters report from May, Tesla also discussed incentives for car and battery manufacturing among others.

For now, the government is waiting on Tesla to provide a roadmap for setting up a manufacturing facility in India.