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New Delhi: Tesla Inc has urged Prime Minister Narendra Modi’s office to slash import taxes on electric vehicles before it enters the Indian market, Reuters reported quoting four sources. Tesla wants to begin selling imported cars in India this year but says taxes in the country are among the highest in the world.
Tesla executives, including its head of policy in India, Manuj Khurana, took the company’s demands to PMO last month in a closed-door meeting, the report said. During the meeting at the PMO, Tesla said that India’s duty structure would not make its business in the country a “viable proposition.”
It is also reported that Tesla has separately put in a request for a meeting between its Chief Executive Elon Musk and PM Modi. However, Modi’s office and Tesla are yet to respond on the matter.
It is also not clear what Modi’s office specifically told Tesla in response, but the four sources told Reuters government officials are divided over the U.S. automaker’s demands. Some officials want the company to commit to local manufacturing before considering any import tax breaks.
India levies an import duty of 60% on electric vehicles that cost $40,000 or less, and 100% duty on those priced over $40,000. Analysts have said that at these rates Tesla cars would become far too costly for buyers and could limit their sales.
Indian companies such as Tata Motors, which recently raised $1 billion from investors including TPG to boost EV production locally, has said giving Tesla concessions would be contrary to India’s plans to boost domestic EV manufacturing.
Earlier, The Union transport minister Nitin Gadkari said that Tesla should not sell made-in-China cars in India and should manufacture locally instead, but Tesla has indicated it first wants to experiment with imports.
The Indian market for premium EVs is still in its infancy and charging infrastructure is scarce. Just 5,000 of the 2.4 million cars sold in India last year were electric.
One government official said lowering duties for a limited period to pave the way for Tesla’s entry could “boost India’s investor friendly image and green credentials” while also attracting more investments.
Tesla’s first request for tax cut was reported in July by Reuters which prompted objection from several local players, who said that such a move deter investment in domestic manufacturing.
(With inputs from Reuters)
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