Indian Govt Won’t Reduce Import Duty For Electric Cars; Big Blow For Elon Musk?
According ro junior minister Krishan Pal Gurjar, India has no intention to reduce import duties on electric vehicles (EV).
The statement comes after Tesla appealed to the centre to cut taxes.
Conditions For Musk To Bring Tesla To India
Chief Elon Musk had responded to tweets asking him when the company would arrive in India, saying that it could set up a local factory here once it starts selling wholly-built units from overseas to test Indian market response.
The government wants to increase local manufacturing whereas Tesla wants the government to allow import of its cars at a cheaper rate before it commits to setting up local production facilities.
Before beginning to produce Tesla cars in India, it should be allowed to start selling its cars here through imports.
Musk had repeatedly expressed interest in entering India which is one of the world’s most promising automobile markets.
He then expressed frustration due to local rules which do not allow him to test the market reception by selling imports first, since high duties make the cars unaffordable.
Indian Government’s Response
Gurjar told the parliament that there is no such proposal under consideration in the Ministry of Heavy Industries.
The ministry is responsible for drafting policies for the auto industry.
However, the government is making efforts to promote the use of electric cars.
To that effect, it is lowering domestic taxes and building charging stations.
The news marks another development in the ongoing tussle between the Indian government and Tesla.
Import Duty Rates In India: Highest Of Any Large Country
Tesla had appealed to the transport and industry ministries to cut import duty on EVs to 40% from the going rate of 60-100%, “the highest in the world by far of any large country” as per Musk.
100% import duty is levied on fully imported cars with CIF (Cost, Insurance and Freight) value over $40,000.
60% duty is imposed on cars costing less than $40,000.
Currently, there is only one Tesla model priced below $40,000 and that is the Model 3 Standard Range Plus.
Tesla said that if import duties were lowered, this would generate increased demand and revenue for the government.
Less Than 1% EV Sales In India Compared To China
Presently, in India, Asia’s third-largest economy, EVs account for just below 1% of annual car sales.
This is in contrast with 5% in China.
There are also infrastructural hurdles in India with sparse charging infrastructure and expensive cost of EVs.
This has prevented large scale adoption of EVs here.
Whereas in China, Tesla has set up its first international factory outside the US.