Tesla’s India Invite: Get Ready for Five Years of Tax-Free EV Imports!
In an effort to attract companies like Tesla Inc. to sell and manufacture electric vehicles in India, the country is contemplating tax reductions on imported fully-assembled electric vehicles for a duration of up to five years.
The Indian government is working on an electric vehicle policy that would allow international automakers to import battery-powered vehicles at reduced tariffs if they eventually commit to building them in India, people familiar with the matter said.
No final decision has yet been made on what the policy will look like, the people said, asking not to be identified because the discussions are private. Spokesmen for India’s heavy industry and commerce ministries did not immediately respond to emails seeking comment.
In 2021, the Austin-based electric vehicle manufacturer had applied for tariff reductions to import electric vehicles. It hoped that prices would be reduced to 40 percent from the current 70 to 100 percent for its vehicles, depending on their import value.
Tesla CEO Elon Musk is likely to meet India’s Commerce Minister Piyush Goyal later this week to discuss the company’s plans to set up a factory in the South Asian nation. Goyal is in San Francisco to attend the Indo-Pacific Economic Framework and Asia-Pacific Economic Cooperation ministerial meetings.
Tesla is aiming to break into one of the world’s most promising auto markets, where demand for electric vehicles is rising among the country’s emerging middle class. For India, Tesla’s investment would help the government to increase the share of the manufacturing industry in the country’s GDP and at the same time create jobs.
According to BloombergNEF, India’s electric car market is currently in its infancy, with electric cars accounting for just 1.3 percent of passenger cars sold last year. The introduction of electric cars in the country has been held back by the high price of cars, the lack of alternatives and the lack of charging stations.
Opening up the electric car segment could accelerate the introduction of cleaner transport in a country that currently has the most toxic air in the world. The government launched a $3.1 billion incentive program in 2021 to increase local production of electric vehicles.
