India Considers Reduction in Import Duties For Electric Vehicles

India is contemplating a reduction in import duties for electric vehicles (EVs), as Tesla’s plans to set up a manufacturing plant in the country continue to evolve.

According to a report from the Financial Times, their sources indicate that Tesla has approached the Indian government seeking an initial tariff concession, aiming to offset the high customs duties imposed by India. Tesla’s proposal includes a request for a reduced tariff of 15% for all EVs, irrespective of their price. Currently, there is a 70% customs duty for cars valued under $40,000 and a 100% duty for cars exceeding $40,000.

This concession is seen as a prerequisite for Tesla to establish a production facility in India. Officials emphasize that the proposed policy has not yet been finalized within the Indian government and is part of a broader scheme designed to benefit multiple EV manufacturers. The Indian government has expressed its intention to create a comprehensive package that fosters EV adoption in the country while avoiding a tailor-made solution for a specific company, with the policy being open for all qualifying manufacturers that are willing to meet the requirements.

Tesla’s engagement with Indian officials has ramped up again this year, after discussions between the two parties reached an impasse over import duties. Tesla executives have been meeting with the government representatives multiple times in recent months, including a meeting between Prime Minister Narendra Modi and Elon Musk in New York in June. Piyush Goyal, India’s commerce minister, is expected to meet with Musk during his visit to San Francisco for economic forums.

According to a recent report, Tesla will likely import the Model Y from Giga Berlin, instead of from Giga Shanghai due to ongoing political tensions between India and China.

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