Tesla Puts India Plans On Hold After Standoff With Govt Over Import Taxes

The world’s most valuable carmaker Tesla Inc seems to have put India plans on hold, as it has stopped looking for showroom space and reassigned some of its India team to other markets.

In a Reuters report, the company is said to have taken the step after failing to secure an exception to the import tax on Tesla vehicles.

The move comes right on the heels of reports emerging that Tesla India employees are working for the larger Asia-Pacific (APAC) market. Most of Tesla India’s team members have travelled to Dubai and are working for the Middle East markets. 

Further, Manoj Khurana, who is responsible for public policy and business development, moved to California in April 2022 to take up a product role, per his LinkedIn profile. Tesla India is headed by Prashanth Menon.

The move comes at a time when the Elon Musk-led carmaker has seen no inroads being made with the Indian government regarding import duties. Since 2019, it has been lobbying the Indian government to reduce the eye-watering import duty rates.

Tesla has not been alone in its lobbying; Audi has also called for a reduction of import duties on EVs in 2021.

India charges a 60% import duty on EVs priced at $40,000 or lower, a stance that has prevented the world’s most valuable carmaker from a full-scale India launch. What’s more, the government also charges a 100% import duty on EVs priced at more than $40,000.

Interestingly, Tesla had set a deadline of February 1 for itself, when India unveiled its Union Budget for the next year. Tesla wanted to see if the lobbying it had done had resulted in any changes. However, the government did not budge, and the US-based carmaker put its plans on hold.

Tesla had been looking for real estate options to open showrooms and service centres in the key Indian cities such as New Delhi, Mumbai and Bengaluru but that plan is also now on hold.

In January, Elon Musk, the Tesla CEO, had said Tesla was ‘still working through a lot of challenges with the government’ in regard to sales in India. However, Tesla is seeing better demand in other geographies, and the standoff between it and the Indian government has prompted the policy change.

India has repeatedly asked Tesla to manufacture in India in order to avoid the import taxes, but Tesla remains unwilling to invest in the country. However, its competitor Mercedes-Benz has since then taken up on the offer and started assembling one of its electric vehicles in India.