Modi Government Expects Elon Musk's Tesla To Be The First Company To Develop 'Make in India'

File Photo: Tesla CEO Elon Musk and Prime Minister Narendra Modi discussing Tesla’s developments in battery technology.
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File Photo: Tesla CEO Elon Musk and Prime Minister Narendra Modi discussing Tesla’s developments in battery technology.

Highlights

  • The heavy industries ministry has requested US-based electric car manufacturer Tesla to first start producing its iconic electric vehicles in India
  • Tesla has asked for a decrease in India's import taxes on electric vehicles (EVs).

According to government sources, the heavy industries ministry has requested US-based electric car manufacturer Tesla to first start producing its iconic electric vehicles in India while any tax discounts can be assessed. This is a major game changer for Elon Musk's goals in India.

They claimed that the government does not give such privileges to any automaker, and that offering Tesla duty incentives will send a negative message to other companies who have spent billions of dollars in India.

Tesla has asked for a decrease in India's import taxes on electric vehicles (EVs). Elon Musk, the CEO of Tesla, tweeted in July that he hoped for temporary tariff easing for electric automobiles. Musk has stated that Tesla intends to debut its cars in India shortly, although Indian import duties are by far the highest of any significant country in the world.

Currently, cars received as completely built units (CBUs) are subject to customs duties ranging from 60% to 100%, based on engine size and cost, as well as insurance and freight (CIF) values of less than or greater than USD 40,000.

The US company claimed in a letter to the road ministry that the efficient import tariff of 110 percent on vehicles with a transaction fee of more than USD 40,000 is 'prohibitive' for zero-emission vehicles. It has asked the government to lower the tariff on electric automobiles to 40%, regardless of the customs value, and to eliminate the 10% social welfare fee on electric cars.

No Indian OEM actually generates a car (EV or ICE) with a former price beyond USD 40,000, according to the business, and just 1-2 percent of automobiles sold in India (EV or ICE) have an ex-factory/customs worth beyond USD 40,000.

Meanwhile, Tesla has a wonderful potential to set establish its production facility in India, according to Union Minister Nitin Gadkari, considering the country's push for electric vehicles. According to the road transport and highways minister, Tesla is already purchasing numerous auto components from Indian automakers and that establishing a base there will indeed be financially sustainable.

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