If the import taxes are lowered, Tesla could sell its full range of cars in the country.
Following a proposal by American automobile company Tesla, the Indian government is mulling a new electric vehicle policy that would provide tax relief to automakers committing to some domestic manufacturing, according to a Reuters report. There exists an understanding with Tesla’s proposal and that the government is displaying interest in the matter, an official told the media outlet.
The government is reportedly considering reducing import tax on fully-built EVs to as low as 15% from the current 100% on cars costing above $40,000. Tesla Model 3 is priced at $40,240 in the United States, while Model Y (Long Range) and Model S cost $50,490 and $88,490 respectively. It was previously reported that Tesla had expressed interest in setting up a factory in India to produce all-new, low-cost $24,000 EVs for the local market and export.
If the import taxes are lowered, Tesla could sell its full range of cars in the country and not just its latest car that the company plans to build locally, the report added. However, the process would involve significant deliberations despite the government’s enthusiasm for acquiring Tesla, an official told the media outlet; adding that this caution stems from concerns about its effect on local EV manufacturers. The policy, which could affect Indian automakers such as Tata Motors and Mahindra that are investing to build electric cars at home, is still in its early stages of discussion and the final tax rate could change.
Additionally, the Elon Musk-owned company will not be given any special incentives for its entry into the home grounds, and the proposal for a low import tax is conditional on a manufacturing commitment. The company has reportedly told Indian officials that a potential India factory could operate at full capacity by the end of this decade.
Indian Prime Minister, who met Tesla’s chief Musk in June, is also reported to have been closely tracking the progress in the matter. Following his meeting with PM Modi, Musk said that the automaker will debut in the country “as soon as humanly possible” and added that “India has more promise than any large country in the world.”
Meanwhile, this is not the first time the American electric vehicle company is discussing its plans to expand its foot in India. In the past, Elon Musk has shown enthusiasm for bringing Tesla vehicles to India and acknowledged that the EV maker was considering opening a factory there. However, in May last year, the company said to put a hold on its expansion plans in the country after it failed to secure lower import taxes from the government. Apart from seeking lower taxes, Tesla also demanded to first test the demand in the country by selling its cars imported from its existing production hubs in the U.S. and China but the discussions ended in a deadlock.