India Considering Tax Cuts on Electric Vehicle Imports to Woo Tesla
India is reportedly weighing tax cut options on the imports of completely built units of electric vehicles in a bid to woo EV makers such as Tesla.
The proposed tax cuts could run for a period of up to five years, if electric vehicle makers agree to eventually make their cars in India.
The Indian government is working on an electric vehicle policy that would allow international car manufacturers to import battery-powered vehicles on concessional duty rates if they commit to eventually building them in India, Bloomberg reported, citing unnamed sources.
A final decision is yet to be taken on the policy’s contours, the report said. People familiar with the matter, when asked by Bloomberg, mentioned that spokespersons from India’s heavy industries and commerce ministries did not immediately respond to its emails seeking comment.
Lobbying for Tesla’s Indian presence
Tesla had sought duty cuts on import of electric vehicles for its proposed entry into the Indian market.
It was reportedly lobbying for a reduction in import duty to 40 percent from the current range of 70-100 percent for its vehicles, depending on their import value.
Tesla’s Chief Executive Officer Elon Musk is likely to meet Indian Trade Minister Piyush Goyal, who is currently on a visit to the US, to discuss the company’s plans to set up a factory in the South Asian nation.
Goyal is in San Francisco to attend the ministerial engagements of the Indo-Pacific Economic Framework and the Asia-Pacific Economic Cooperation.
Tesla is seeking to break into one of the world’s most promising auto markets where the demand for EVs is rising among the country’s burgeoning middle class.
For India, Tesla’s investment would aid the government’s push to increase the share of manufacturing in the nation’s GDP while also creating jobs.
Addressing challenges in electric vehicle adoption
India’s electric car market is currently at a nascent stage with electric vehicles accounting for just 1.3 percent of the total passenger vehicles sold last year, according to Bloomberg NEF.
The adoption of EVs in the country has been held back by the high cost of cars, a dearth of options and lack of charging stations.
Opening up the electric vehicle segment could speed up the adoption of cleaner transport in a country that currently has the world’s most toxic air.
The government launched a $3.1 billion incentive programme in 2021 to boost local electric vehicle production.
Separately, India is also considering reducing import taxes on some electric vehicles from the UK as part of negotiations with Britain over a free-trade deal, the Bloomberg report said.
