Govt considering request to lower tariffs on imported EVs to lure Tesla: Report

After several rounds of talks, looks like the government is finally ready to lower the import duties for EVs in India. As per a report by Financial Times, India is considering reducing taxes on the import of electric vehicles. The US EV maker is reportedly planning to set up its manufacturing unit in India.

In India, completely built-up (CBU) vehicles priced below $40,000 face an import duty of 70 per cent while those priced above $40,000 face an import duty of 100 per cent. As per the report, the government is considering reducing it to 15 per cent for electric vehicles of all prices. However, the report clarifies that the government has not yet agreed upon this change in policy.

As per a statement received by FT from a source familiar to the matter, “Their view has always been that they need some tariff concessions at least in the interim period… It would have some kind of sunset clause."

Another source stated, “We want to create a package which is good for India and which doesn’t become a curated package for one company… Others are free to take advantage of this window, subject to meeting these kinds of requirements."

Reuters recently reported that Tesla CEO Elon Musk is set to meet the Minister of Commerce and Industry, Piyush Goyal. It was reported that Goyal and Musk will discuss India’s new policy that will allow automakers to import fully built EVs into India at a reduced tax rate of 15 per cent, down from 100 per cent. Notably, this policy is still in works.

Back in 2021, Tesla had abandoned its plans to enter the Indian market due to inconclusive talks on import duties with the Indian government. The government insisted on local manufacturing and in return, promised other benefits. The government also encouraged Tesla to apply for the production-linked incentive scheme.

As per the report, this upcoming meeting will ensure that the talks are going in the right direction.

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