According to government sources, the heavy industries ministry has urged US-based electric car maker Tesla to first start producing its iconic electric automobiles in India before any tax incentives can be considered, which is a huge setback for Elon Musk’s goals in India. They said that the government does not give such concessions to any automaker, and that providing Tesla duty incentives will send a negative message to other firms who have spent billions of dollars in India. Tesla has asked for a decrease in India’s import tariffs on electric cars (EVs). Elon Musk, the CEO of Tesla, tweeted in July that he hoped for “temporary tariff relief for electric automobiles.”
Musk has stated that Tesla plans to introduce its vehicles in India shortly, however Indian import tariffs are by far the highest of any big country in the world! ‘ The US company claimed in a letter to the road ministry that the effective import duty of 110 percent on cars with a customs value of more than USD 40,000 is “prohibitive” for zero-emission vehicles. It has asked the government to lower the tariff on electric automobiles to 40%, regardless of the customs value, and to eliminate the 10% social welfare fee on electric cars. No Indian OEM presently manufactures a car (EV or ICE) with an ex-factory price beyond USD 40,000, according to the firm, and just 1-2 percent of automobiles sold in India (EV or ICE) have an ex-factory/customs worth above USD 40,000. Tesla has a good potential to set up its production facility in India, according to Union Minister Nitin Gadkari, given the country’s push for electric vehicles.