Investment plan

India could offer Tesla partial customs break, asks for detailed investment plan

India could offer partial tariff relief to electric vehicle maker Tesla and has asked for the company’s detailed plans to invest in the country, officials familiar with the deliberations told ET.

Relevant ministries are considering Tesla’s request for reduced import duties. “We can offer some relief … but we need to know what their plans are,” an official said. Final notice will be taken once the company provides it, another official said.

ET had in its July 27 edition signaled that the government was open to lower import duties on electric vehicles (EVs) if the company gave assurances to begin manufacturing in the country. Tesla has asked for a 40% import duty on fully assembled electric cars against the current 60% rate applicable on those priced below $ 40,000 and 100% on those above that threshold. Tesla reported this issue in a letter to various government ministries and departments. The company wants its cars to be treated as electric vehicles and not as luxury cars. Tesla executives have met with senior government officials on the issue.

India’s current tariff regime does not distinguish between electric cars and those that run on traditional fuels and imposes high tariffs to encourage local manufacturing. PM Narendra Modi has identified clean energy and electric vehicles as key focus areas and these are encouraged by several incentives.

The goods and services tax on electric vehicles was reduced to 5% from 12%, while that on chargers and charging stations for electric vehicles was reduced from 18% to 5%. The Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME) program offers incentives to purchase electric vehicles through an initial price reduction.

Tesla CEO Elon Musk reported high import duties levied by India on electric vehicles. “We want to do it, but import duties are by far the highest in the world of any major country!” He tweeted earlier in response to a question about the launch in India. “In addition, clean energy vehicles are treated the same as diesel or gasoline, which does not appear to be entirely in line with India’s climate goals,” he said.

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