India Will Not Change Policy For Tesla, Says Commerce And Industry Minister Piyush Goyal

Goyal stated that the govt understands the need for an EV ecosystem to lower carbon emissions and the significant cost of oil imports. But those policies will not be suitable for any specific company.

India will not modify its policies to appease US electric car company Tesla. Instead, its laws and tariff regulations will be designed to entice global manufacturers of all-electric vehicles to establish a presence in the fastest-growing economy in the world, said Commerce and Industry Minister Piyush Goyal.

According to PTI, Tesla wanted an initial tariff exemption that would enable it to deduct 70% of customs duty on vehicles under USD 40,000 and 100% of duty on vehicles over USD 40,000.

Goyal stated that the government acknowledges the necessity of a robust EV ecosystem, recognising that increased use of battery-powered vehicles will reduce carbon emissions and the substantial oil import bill. However, he stressed that policies will not be tailored to suit any specific company. Instead, they will be crafted to encourage all-electric vehicle manufacturers globally to invest in India. "We are working on several initiatives where we are having inter-ministerial (consultations) and a dialogue with the stakeholders, with potential investors from across the world from Europe, from the United States, from the Far East, from Japan, from Korea," he also said.

Tesla has made tariff concessions a precondition for establishing a plant in India. High tariffs on motor vehicles, aimed at boosting local production, have been a persistent concern for foreign automakers.

Govt Does Not Tailor Policy For Any Single Individual Company: Goyal

"Government does not tailor policy for any one individual company or its interests. Everybody is free to make their demands. But that does not mean that the government will necessarily take a decision (based on) what you demand," he added. Goyal's remarks came in response to inquiries about whether the government plans to offer concessions to Tesla for establishing a manufacturing facility in India.

Whenever the Indian factory materialises, it will mark Tesla's sixth vehicle plant.

Currently, the percentage of customs duty applied to automobiles imported as completely built units (CBUs) varies from 60% to 100%, based on the engine size, cost, insurance, and freight (CIF) value of USD 40,000 or more.

Elon Musk, the CEO of Tesla Inc., the biggest manufacturer of electric cars in the world, met Prime Minister Narendra Modi in New York in June of last year. Following their meeting, Musk announced his intention to visit India in 2024.

"We recognise that India must have a vibrant electric mobility ecosystem. We recognise that it has multifarious benefits to grow towards electric mobility. Not only will it help us in our fight against climate change, it will also improve the environment and lower pollution levels, particularly in cities, which largely suffer because of the ICE (internal combustion engine) or the petrol-diesel fumes that are thrown out," Goyal stated. "So, it has so many multifarious benefits which will impact not only the country's environment but will also impact the country's economy, it will add to our economic output. It will save foreign exchange, reduce our trade deficits, help us in our fight against inflation, thereby helping us in reducing interest rates," he emphasised.

According to the minister, this industry has the potential to be an effective means for strengthening the macroeconomic foundation of the nation. "So it'll be a project (that we) will be continuously looking to encourage all-electric vehicle manufacturers across the world."

"And we are working on several initiatives where we are having a dialogue, inter-ministerial, with the stakeholders, with potential investors from across the world from Europe, from the United States, from the Far East, from Japan, from Korea. So we have significant engagements going on across the world," the minister concluded.

Amid growing tensions between Beijing and Washington, India, the third-largest energy user in the world, is positioning itself as an alternative investment destination for US corporations. To attract EV players, the government has introduced production-linked incentive schemes for advanced chemistry cell manufacturing and component production.

Production-Linked Incentive (PLI) Schemes For ACC

In November last year, Goyal visited Tesla's manufacturing facility in Fremont, California. The company procured goods worth around USD 1 billion in 2022. India has introduced production-linked incentive (PLI) schemes for advanced chemistry cell (ACC) battery storage, with an outlay of Rs 18,100 crore, and a Rs 26,058 crore PLI scheme for auto, auto-components, and drone industries.

Under the proposed accord, the UK is requesting customs duty discounts on exports of electric cars in addition to pursuing a free trade agreement with India. International firms are taking notice of India's rapidly expanding electric vehicle sector. By 2035, the UK plans to phase out internal combustion engine (ICE) automobiles, and exports drive the British auto industry.

Experts claim that Europe is the UK's top export market for automobiles, and the country is trying to increase the variety of goods to export.

According to the Economic Survey 2022–23, India's market for electric cars is predicted to reach one crore units in sales annually by 2030 and generate five crore direct and indirect employment. Industry estimates place the overall number of electric vehicle sales in India in 2022 at about 10 lakh units. When it comes to electric cars for passengers, Tata Motors is the industry leader in India. The firm now offers three EV models: Tiago EV, Tigor EV, and the Nexon EV series.

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