Will Tesla Enter Indian Market Soon? Government May Consider Reducing Import Duty

Tesla Chief Elon Musk recently said that the import duty in India is higher than in other countries. Now, the government can consider giving exemption in import duty to Tesla vehicles.

Representative Photo

New Delhi: The American electric vehicle company Tesla can enter the Indian market soon. In fact, the Indian government may consider reducing import duty along with other exemptions to Tesla, on the condition that the electric vehicle company will have to invest in setting up manufacturing plants in the country.

Tesla had earlier demanded the government to reduce import duty on electric vehicles. It wants to bring its latest electric vehicles as a fully-manufactured unit before looking at its assembly and manufacturing in India.

Manufacturing plant will have to be set up
According to an official source, if Tesla decides to manufacture its cars in the country and decides to invest in setting up the plant, the government will consider the request of lowering the import duty. However, the official made it clear that any decision on this matter or extension of exemption would apply to the entire sector and not just a particular company. The central government, along with some other state governments, has already taken several steps to promote electric vehicles in the country. Along with incentivizing EV (electric vehicle) manufacturing in the country, the government has also come up with tax benefits on the purchase of electric vehicles.

'India has the highest import duty'
Tesla Chief Elon Musk recently said that his electric vehicle (EV) company wants to launch cars in India, but the country's import duties on EVs are "highest in the world by far". India's import duty is the highest compared to the rest of the world. Currently, India levies 60 per cent duty on imported cars that cost less than $40,000 and 100 per cent on cars priced above $40,000. This makes most of the completely built unit imported cars twice as expensive as they are in many foreign markets.

GST reduced on electric vehicles
To promote electric vehicles in the country, the government has reduced the GST on such vehicles from 12 per cent to 5 per cent. The GST on chargers/charging stations of electric vehicles has been reduced from 18 per cent to 5 per cent. Apart from this, the Ministry of Road Transport has issued a notification advising the states to waive road tax on electric vehicles. This, in turn, will help in reducing the initial cost of electric vehicles.