Photo: Udi Etzion
Tesla is lobbying the Indian government to reduce taxes on imported electric vehicles, sources said. This should stimulate an increase in electric vehicles on the country's roads. Lower taxes would also give Tesla a better chance at properly testing the local market.
Tesla has sent a letter to Indian ministries asking for a significant reduction in import duties on electric vehicles, which should increase demand for them and generate revenue for the government, two knowledgeable sources told Reuters, who asked not to be named. The California-based manufacturer said in a letter to the ministry and the country's leading think tank, Niti Aayog, that it would be more appropriate to lower federal taxes on imports of fully assembled electric vehicles to 40%. That compares with current rates of 60% for cars priced below $40,000 and 100% for those above $40,000.
This will increase the number of electric vehicles on India’s roads, while with high demand, it would still be more feasible for automakers to produce cars locally. “The argument is that at 40% import duty, electric cars can become more affordable but the threshold is still high enough to compel companies to manufacture locally if demand picks up,” one of the sources said.
Other luxury car manufacturers in India have also lobbied in the past for the government to lower taxes on imported cars, but have not made much progress due to opposition from domestic competitors. However, the scale of Tesla's operations and the popularity of its cars could provoke the state to take this proposal seriously and try to find a compromise with the manufacturer.
Lower tariffs would give Tesla a chance at better testing India’s market, however the company's plan to launch sales in India is not affected by government policy changes, both sources said. India intends to offer very good conditions for Tesla if the company will produce electric vehicles in the country.
© 2021, Eva Fox. All rights reserved.
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About the Author
Eva Fox
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.
