Tesla Inc seeks a reduction in import tax duty on electric vehicles (EVs) by submitting a letter to the Indian Government. As per the letter, Tesla Inc believes the reduced duties shall magnify the demand and produce revenue for the government- stated sources.
However, the demand of Tesla Inc is not in sync with the government policies. The policies introduced by the Hon’ Prime Minister Narendra Modi’s government of higher import taxes to magnify the local manufacturing sector.
The demand for reduction in import taxes isn’t new. In the past, many luxury automakers have sought a reduction in the import tax but haven’t succeeded due to heavy competition from domestic car manufacturers.
As per the sources, Tesla has recommended the import duty on fully assembled electric cars to be 40% in its letter to Niti Aayog & the Indian Government authorities.
According to the recommendation by Tesla, 40% import duty shall result in the electric vehicle being more affordable. However, the verge is high enough for car manufacturers for local production based on demand increase.
If the government considers to go by the recommendation of Tesla, the government may have to roll back the taxes. Which may result in the government contradicting its strategy to increase local production. The current duty on an import is 60% for vehicles below $40,000 & 100% on above $40,000.
As per Tesla’s US pricing, the model 3 Standard Range Plus is the only model priced below $40,000.
The Indian market is still in its early stages for EV’s for both the premium and regular segments. The government has been working towards the infrastructure & also offered incentives on the purchase of Electric vehicles.
Out of 2.4 million cars, only 5000 units of electric cars were sold in India last year & quite a few vehicles were priced below $28,000.
Minister of Road Transport & Highways of India Mr. Nitin Gadkari had stated in March to Reuters. India would incentivize to ensure the cost of production is lower than China for Tesla only if produced locally.
Though the lower import duty would provide a huge benefit to Tesla. But will the Indian government consider the demand for lower import tax? Will the government roll back its campaign #GoLocal? Only the coming time shall state.