Tesla CEO Elon Musk has found a friend in Aaditya Thackeray. Here is why

  • Tesla CEO Elon Musk recently said that he is facing ‘challenges’ as the EV maker is busy negotiating EV import duties in India with the Centre.
Aaditya Thackeray, Minister for Tourism and Environment of Maharashtra. has recommended Finance Minister Nirmala Sitharaman to lower the import duty on electric vehicles, something which echoes Tesla CEO Elon Musk's urge to the Centre as well.
Aaditya Thackeray, Minister for Tourism and Environment of Maharashtra. has recommended Finance Minister Nirmala Sitharaman to lower the import duty on electric vehicles, something which echoes Tesla CEO Elon Musk's urge to the Centre as well.

World's largest electric vehicle manufacturer Tesla has recently found several offers from state governments in India to set up its shop. But few could offer what its CEO Elon Musk has been looking for. As Tesla talks with the Centre to reduce import duties on EVs in India, Musk has found a friend in Aaditya Thackeray, Minister for Tourism and Environment of Maharashtra.

Thackeray has written a letter to Finance Minister Nirmala Sitharaman on the state's expectation from the upcoming Union Budget 2022-23 to be presented early next month. Thackeray suggested the Centre should lower import duties on electric vehicles. The letter reads, "Pioneering companies like Tesla, Rivian, Audi, BMW among many others must be given a time-bound concessionary customs rate for the import of vehicles for retail sale. This will drive the aspiration value in the market, boost investment in our supply chain and encourage the startup ecosystem to follow the lead of such companies."

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He said that the concessionary rate could be for a maximum of three years or a defined limit of vehicles for any foreign company wishing to sell or import EV components of global standard to make in India. He also said that the concessionary rate could also be given against a fixed investment guarantee in India's auto supply chain or charging infrastructure from these carmakers.

The letter, which was written earlier this week, also suggests, “A mere high import duty only adds to the burden of the customer and does not lay the ground for any industry investment as custom revenues are not directly used for sectoral investments."

Tesla had sought a reduction in import duties on electric vehicles in India in 2021. In August last year, Musk had raised the concern saying 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’. But the Centre has so far been non-committal to Tesla's demand. The Centre wants Tesla to share its plans of production in India first before committing any reduction on import duties.

India currently imposes 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 US-based company has been considering setting up a manufacturing plant and locally produce cars in India that will help the company to keep pricing of the cars affordable. In January last year it had registered itself as Tesla India Motors in Karnataka.

First Published Date: 20 Jan 2022, 10:01 AM IST
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