Rejecting Tesla's appeal, government says won't slash duties on EVs

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Chandraveer Mathur

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Last updated on Aug 03, 2021, 11:55 am

Since 2018, American carmaker Tesla has repeatedly expressed interest in entering the Indian market. However, weeks after Tesla appealed to reduce taxes, the Indian government stated that it has no plans to slash import duties for electric vehicles. Tesla appears to be interested in importing cars for sale in India before fully committing to localizing manufacturing in the country. Here are more details.

Tesla planned to open dealerships in India, shipped display cars

In April this year, the Elon Musk-led company said that it planned to open its first few dealerships in Delhi, Mumbai, and Bengaluru. Some display cars also made their way to the country amid the pandemic. However, Musk's arduous journey of commencing the sale of Tesla cars in India has just begun. Tesla initially plans to import fully-assembled cars.

Thanks to import duties, Tesla 3 becomes a luxury product

For instance, the Tesla Model 3 costs $39,990 in the US (almost Rs. 30 lakh). However, it would reportedly cost Rs. 60 lakh after a 100 percent duty is levied on it for being imported into India for sale.

Ministry not considering any proposals to reduce import duties

Bloomberg reported that last month, Tesla requested the transport and industry ministries to reduce the 60 to 100 percent import duty levied on electric cars, to 40 percent. However, on Monday, Junior Minister Krishan Pal Gurjar told the Parliament, "No such proposal is under consideration in Ministry of Heavy Industries." The minister was referring to the possibility of slashing import duties for fully-built cars.

Tesla factory likely if imported cars can be sold first

The minister added that the government remains committed to promoting electric cars by lowering local taxes and adding charging stations. Notably, the precursor for availing the tax benefits is that the company establish and use a facility to manufacture electric vehicles locally. In a tweet, Musk said that an Indian Tesla factory is "quite likely" if the sale of imported vehicles can begin first.

Here is the complete Twitter thread by Musk

Indian electric car adoption lags due to poor charging infrastructure

At present, electric cars reportedly account for less than one percent of annual car sales in the country compared to a five percent share in China, where Tesla is an electric car market leader and has already set up a Gigafactory. Additionally, the sparse charging infrastructure in India also deters potential buyers. However, the landscape is changing swiftly and Tesla could enter India soon.