No tax relief for Elon Musk’s Tesla from the Indian government

For those waiting to see Tesla’s electric cars in India, it will have to wait a bit longer, it seems. Tesla co-founder Elon Musk has asked for tax breaks on his electric cars and the Indian government doesn’t seem to be in the mood to budge. Instead, the government says there are provisions for local assembly of vehicles in India, which is the standard followed by several traditional luxury automakers in the country.

“We have considered whether the duties should be rearranged, but some domestic production is ongoing and some investment has taken place with the current tariff structure,” Vivek Johri, chairman of the Central Excise and Customs Board, said in a statement. . interview, according to a recent report. “So clearly that’s not an obstacle.”

Tesla has all of the following in India, but its high-end positioning means sales will be limited

Prime Minister Narendra Modi’s administration has encouraged Tesla to produce locally. However, Musk wants India to reduce taxes by up to 100% on imported electric vehicles. This, according to Musk, will allow the company to first sell vehicles built elsewhere at competitive prices. However, it levies import duties of 15-30% on parts shipped for assembly.

The report further states that Tesla has yet to come forward with a plan for local manufacturing and sourcing in India, even after the government requested it, Johri said. The federal budget earlier this week did not mention any tax breaks for cleaner but imported vehicles, even though the western state of Maharashtra – home to financial capital Mumbai – publicly backed Tesla’s demands.

Politicians from at least five Indian states have invited Tesla to move into their provinces after Musk said last month that the US electric vehicle pioneer still faces numerous challenges with the federal government. India has asked Tesla to consider importing so-called disassembled units or partially built vehicles, which are subject to a lower import levy, instead of fully built units.

Tesla should follow the example of national companies like Mahindra & Mahindra Ltd. and Tata Motors Ltd., which are investing in building local capacity for electric vehicles, Johri said. “There are others importing fully built units. That road is open,” he said.

Tesla’s demands also come at a time when incumbents like Mercedes-Benz have announced local assembly of electric cars in the country. The automaker will locally assemble the EQS later this year. Additionally, mass market players like Maruti Suzuki and Hyundai are also reportedly working on accessible electric vehicles aimed at Indian buyers. Currently, the electric vehicle segment represents less than 1% of total automobile sales. However, the number is set to increase slowly and surely.

The report further states that Tesla first revealed its definite intention to enter India as early as 2019, but Musk said local rules prohibit it from testing the waters with imports first, as high duties make “unaffordable” Tesla cars. In October, an Indian minister said he had asked Tesla to avoid selling Chinese-made cars in the country and urged the automaker to manufacture, sell and export vehicles from a local factory.

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“Some investments have already been made with the current tariff structure. So why can’t others come in as well?” Johri said. “There are also other foreign brands that are sold in the country with the current tariff structure.”

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