With Tesla push, India considering to slash import tax on EVs built locally: Report

With Tesla's increasing interest in the Indian market, the government is working on electric vehicle (EV) policy which is mulling over potential import tax cuts for EV manufacturers willing to establish their production facilities in the country, said a report on Friday. The move aims to provide a significant boost to Prime Minister Narendra Modi’s plan to drastically escalate the nation's EV production capacity, reported Reuters quoting sources.

The government is considering slashing the import duty on electric vehicles (EVs) to 15 per cent from 100 per cent, if the automakers commit to manufacturing at least 40 per cent of the vehicles locally, Reuters quoted sources as saying.

The move is seen as an attempt to attract Tesla and other global automakers to set up manufacturing plants in India. Tesla has been in talks with the Indian government for over a year about entering the market, but has been reluctant to do so due to the high import duties.

The new policy is still being finalized, and it is not clear when it will be implemented. However, the government is keen to make India a major hub for the production of EVs, and this move is seen as a step in that direction.

The government has set a target of achieving 30 per cent electric vehicle sales by 2030. In order to achieve this target, the government is offering a number of incentives to EV buyers and manufacturers, including tax breaks, subsidies, and the creation of a charging infrastructure.

The lower import taxes could help Tesla sell its full range of models in India, and not just the new car it wants to make locally, Reuters quoted a source as saying.

Other countries have taken similar measures to spur EV manufacturing commitments. Indonesia, for example, has offered to reduce import duties from 50% to zero for EV makers planning investments, a move seen aimed at attracting Chinese players and Tesla.

More recently, Tesla has told Indian officials it is keen to set up a local factory and make a new EV priced in the range of $24,000, around 25 per cent cheaper than its current entry model, for both the Indian market and export.

For India plans, Tesla's senior public policy and business development executive Rohan Patel has in recent weeks met top officials privately. Prime Minister Narendra Modi, who held talks with CEO Elon Musk in June, has been tracking progress closely, Reuters has reported.

Tesla told Indian officials a potential India factory could operate at full capacity by 2030, Reuters quoted sources as saying.

Indian officials have conveyed there will be no special incentives for Tesla's market entry, and the proposal for a low import tax, conditional on a manufacturing commitment, was touted by Tesla to keep both sides happy.

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