Tesla’s India Entry Stalled as Local Firms Oppose Reduced EV Import Tax: Report

Tesla's India Entry Stalled as Local Firms Oppose Reduced EV Import Tax: Report

EV maker Tesla’s entry into India could be delayed further as the government has not taken any decision on the demand to lower import tax on vehicle imports.

Global electric vehicle (EV) manufacturing giant Tesla’s hopes of entering the India market hangs in balance as the government is yet to make up its mind on lowering import taxes on EVs, reported news agency Reuters quoting a top government official.

The official’s statement comes amid reports that a new policy to lower import tax on EVs has been proposed for carmakers that commit to local manufacturing.

According to report by India today, Rajesh Kumar Singh, a top bureaucrat at the Department for Industry and Trade Promotion, told the news agency that Tesla would likely try to bring cars to the market in India in the range of $24,000 to $36,000 because they know “that’s where the volumes” will be available.

“The issue is raising resistance from domestic industry because they are also in that (EV price) segment,” Singh said late on Wednesday. “It’s a very contested area and we’ve not been able to take a final call on this so far.”

Local automakers oppose lower EV import tax

In meetings held with government officials last year, Tesla committed to making a significant investment towards local manufacturing in the country, provided it initially gets the benefit of lower import tax on EVs.

Tesla has been demanding lower taxes due to India’s high import duty on imported vehicles, including EVs. But the government has strictly maintained in official communications that no such proposal has been under consideration.

However, Tesla’s proposition to the government seems to be facing resistance from domestic automakers who are not only concerned about Tesla’s potential entry in the market, but also worried about the fact that such concessions would attract other global carmakers and lead to stiff competition.

It is worth noting that the government has been working on a proposed policy to slash the high 100 per cent EV import tax to as low as 15 per cent for automakers that commit to investing and manufacturing locally in India over a period of time.

While Singh did not name any domestic automakers, news agency Reuters had earlier reported that automakers such as Tata Motors and Mahindra & Mahindra have opposed lower import taxes. The two companies are the most popular domestic EV manufacturers in India.

Just a few days ago, Mahindra & Mahindra Managing Director Anish Shah said a level playing field is needed between domestic and foreign EV automakers, adding that the country must promote local manufacturing.Without lower taxes on EV imports, Tesla’s entry into India could be put on hold, similar to what happened the first time the EV giant tried to start selling its vehicles in the country.

Shrabani Sarkar

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