Govt Tells Tesla To Set Up Plant In India Following Tax Cut Plea

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Tesla is expected to debut in India with the Model 3 sedan as four models have been homologated for India

Tesla entering India has been a subject of discussion for long and recently the test mules of the Model 3 and Model Y further fuelled the rumours. Earlier this year, Tesla homologated four models for India and received approval for imports. Tesla’s Elon Musk openly expressed on Twitter that the high import tax structure is preventing the brand from launching locally.

Union Minister Nitin Gadkari has asked for Tesla to establish its production base in India first before considering any tax exemptions according to a report. It has been further said that giving tax concessions to any automaker would not go well with other brands that have invested a hefty sum in their Indian operations.

According to a prediction from NITI Aayog, 80 per cent of two- and three-wheelers, 40 per cent of buses, and 30 to 70 per cent of cars will be electrified by the end of this decade. Tesla is currently the top-selling and most valuable electric carmaker in the world and it has constantly been pushing the boundaries of technologies and India could turn out to be an attractive market.

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Compared to many international markets, the transition from IC-engined vehicles to electric mobility solutions will only be gradual in India. The domestic market has a handful of passenger EVs on sale already and cars are being imported as well. The CBUs attract duty ranging between 60 and 100 per cent based on the engine size, insurance and freight value less or above 40k USD.

Tesla wrote to the road and transport ministry asking for relaxation and standardising the tariff on EVs to 40 per cent irrespective of the customs value. The brand believes it could boost the development of the EV market while increasing procurement from India. It further argued that it would not affect the existing carmaker producing electric vehicles.

The American company is already sourcing components from its Indian suppliers and setting up a manufacturing unit could make it more economical, according to the Road Transport and Highways Minister reportedly and it will be interesting to see what the brand decides.