Blow to Tesla? Centre rules out reduction in import duties on electric cars

Days after Tesla CEO Elon Musk expressed hopes that India reduces tax on imported electric cars, the Centre has reacted. And it is not what Tesla would have hoped. The government has ruled out any reduction in import duties as of now in what could be a blow for the US-based electric vehicle manufacturer.

India says no plan to cut taxes on imported EVs in blow to Tesla. (Tesla)
India says no plan to cut taxes on imported EVs in blow to Tesla.

Krishan Pal Gurjar, who was recently inducted in the cabinet as the MoS in the Ministry of Power and Heavy Industries, said that the Centre has no proposal to ease Tesla's entry in India. On Monday, he said, "“No such proposal is under consideration in Ministry of Heavy Industries."

Gurjar's reaction came a week after Tesla CEO Elon Musk tweeted that he is hoping for a 'temporary tariff relief for electric vehicles'. Musk had said that Tesla wants to launch its cars soon in India, but Indian 'import duties are the highest in the world by far of any large country!'

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Tesla's take on import duties in India sparked a debate among carmakers in the country. There was a clear divide in opinions shared by vehicle manufacturers. While Hyundai echoed Tesla seeking reduced taxes, Tata Motors asked for equal treatment for Indian carmakers too. Ola Electric, which is all set to launch its first product in India, said emphasis should be more on promoting local manufacturing besides tax cuts.

India currently demands customs duty ranging between 60 per cent to 100 per cent on imported cars. India imposes 100% import duty on fully imported cars with CIF (Cost, Insurance and Freight) value over $40,000, while 60% duty is imposed on cars that cost less than the amount.

The Centre may have ruled out any tax reduction for now, but Gurjar said there are other things that the government can help the carmakers with. He said that the government is aggressively promoting use of electric vehicles by keeping domestic taxes low, offering incentives through the FAME II scheme, and help to install EV charging stations for develop the EV ecosystem in the country.

Tesla announced its entry in India earlier this year by registering as Tesla India Motors in Karnataka. Elon Musk had said that a Tesla 'factory in India is quite likely' but at the condition that its imported cars first succeed in the country.

First Published Date: 03 Aug 2021, 08:48 AM IST
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