Govt Reviewing Proposal To Cut EV Tariff To Lure Tesla: Report

The government's move might encourage Tesla to expedite the process for setting up its facility in the country.

Tesla had sought a reduction in tariffs for imported electric vehicles (EVs).

Source : Getty

The government is reviewing a proposal from Tesla, led tech billionaire by Elon Musk that sought a reduction in tariffs for imported electric vehicles (EVs) as the company explores the possibility of establishing a manufacturing facility in India. The request includes an appeal for an initial tariff concession to counterbalance India's existing high customs duties, which stand at 70 per cent for cars under $40,000 and 100 per cent for cars exceeding $40,000, says a report by Financial Times (FT), which cited sources.

The government's move might encourage Tesla to expedite the process for setting up its facility in the country. As a prerequisite for building a manufacturing facility in India, Tesla sought the concession, which, if granted, would make way for reduced tariffs for all electric vehicle (EV) manufacturers.

"Their view has always been that they need some tariff concessions at least in the interim period. It would have some kind of sunset clause," one of the officials was quoted as saying by the FT report.

The officials further mentioned that the reduced rate under consideration would be 15 per cent for EVs of all prices, but that the policy had not yet been agreed upon within the government.

Earlier in September, it was reported that Tesla is considering the construction of a battery storage factory in India, having submitted a proposal to the government. The electric car maker is suggesting bolstering India's battery storage capabilities through its 'Powerwall,' as discussed in recent meetings.  Musk is additionally focused on establishing a Tesla supply system in India.

To recall, Tesla executives also held talks with senior Indian government officials and ministers in May on setting up a manufacturing base for cars and batteries in India. However, the EV shelved its India entry plans because of high import tax structures. According to a previous report by ET, Tesla wants to set up its supply-chain ecosystem in India, which is being seen as a significant opportunity for the country's EV manufacturing space