Govt could reduce import tax on imported EVs to fecilitate Elon Musk’s Tesla


New Delhi: The government is working on a new electric vehicle policy. Under this, such auto companies can be exempted from import tax which will do some manufacturing in the country. Elon Musk’s company Tesla has proposed to enter the Indian market. The company had demanded to reduce import tax in India. According to a Reuters report, the government may reduce the import duty on cars made entirely abroad from 100% to 15%. Imports of cars costing more than $40,000 attract 100% import tax, while it is 70% for other cars. Tesla’s best selling car is the Model Y which costs $47,740 in the US.

An official said that there is an understanding on Tesla’s proposal and the government is showing interest in it. If the government adopts such a policy, then it can lead to a huge drop in the price of EV cars imported from abroad in the country. This can open the doors of India for other foreign auto companies as well. India is the third largest car market in the world, but the sale of EV cars in the country is less than two percent. Although it is increasing rapidly. A source said that Tesla can sell all its models in India due to the reduction in import tax. The commerce and finance ministries did not comment on this. Sources said that this policy is still in the initial stages of discussion and there may be a change in the final tax rate.

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Tesla’s proposal

Tesla tried to enter India in 2021 but the company demanded a reduction in import tax on EVs. The government said that first the company will have to promise manufacturing in the country, after that it can be considered. After this the talks between the two parties broke down and Tesla gave up the idea of ​​coming to India. In June, Musk met Prime Minister Narendra Modi in the US. Since then, the buzz of Tesla’s entry in India has intensified.

A source said that Tesla has told the Indian authorities that by 2030 its factory in India can start working at full capacity. However, companies like Tata Motors and Mahindra & Mahindra may be affected by the exemption in import tax. An official said that the government is keen to bring Tesla to India but nothing will be done in haste. Many other countries have also taken such measures to promote EV manufacturing. For example, Indonesia has offered to reduce import duty on cars from 50% to zero. It is believed that this offer is being made to attract Chinese companies and Tesla.

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