India may reduce EV import duty as Tesla launch reports gather steam: Report

Despite Tesla's plan to set up business officially in India, nothing has been confirmed yet. While Tesla has been demanding lowered import duty so that it can start selling its electric cars in the country officially by importing, the Indian government has been clear that there won't be any reduction in import duty. It is also demanding the EV manufacturer must set up a manufacturing plant and locally produce its electric vehicles to sell here. While this has slowed down the pace of the development of Tesla's India business ambition, the Indian government is reportedly mulling the plan to reduce its import tariffs for electric vehicles with an aim to lure the Elon Musk-led EV company into the country.

The Indian government is reportedly considering Tesla's request to lower import tariffs for electric vehicles to 15 per cent, which would expedite the EV manufacturer's arrival in India. A Financial Times report has revealed that as Elon Musk's company explores setting up a plant in India, this move may encourage the automaker to expedite the process.

Interestingly, this move comes on the heels of the revelation that Tesla is planning to build its most affordable electric car ever at its plant in Germany. Initially, this most affordable Tesla EV was thought to be built in India. However, the EV manufacturer changed its mind and now planning to make the car in Germany. Upon launch, this would be the most affordable Tesla car ever. It would be priced at around $27,000 and will come as a cheaper derivative of the Tesla Model 3 sedan.

Tesla has requested the Indian government for an initial import tariff concession that would allow the company to offset the country's steep customs duty of 70 per cent for importing all completely built unit (CBU) cars worth less than $40,000 ( ₹33.31 lakh), and 100 per cent for cars worth $40,000 or more.

The report has quoted a government official saying that Tesla's view has always been that the company needs some tariff concessions at least in the interim period, which comes as a precondition to building a plant in India. However, the Indian government initially revealed that it was not planning to offer Tesla any such special concession. The latest development would, however, not only help Tesla but all the automakers who import electric vehicles in India through the CBU route. “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," the official has reportedly stated.