India open to lowering import taxes on EV, but they want to see Tesla’s plans first

Tesla Fremont factory
Image via Tesla

It seems that with each passing day the likelihood that India will lower their import taxes on electric vehicles (EVs) is growing. The government is now reportedly seeking more information from Elon Musk on how Tesla plans to do business in the country before committing to any tax cuts.

India’s ministries of heavy industries and finance have asked Tesla to share detailed information on two aspects of their business plans, according to a source with knowledge of the discussions who spoke with Bloomberg.

The first is local procurement of parts. Part of the reason India has so far been reluctant in agreeing to lower taxes on imported EVs is the government’s efforts to boost local manufacturing. The government views a concession as harming the local manufacturing sector, but they appear willing to be flexible if Tesla can increase local procurement of parts.

During the discussions, Tesla reportedly claimed $100 million of locally procured components so far, but promised to increase that further if import taxes were lowered.

The other aspect the government is seeking more information on is Tesla’s manufacturing plans. Musk has previously stated that his company would open a manufacturing facility in India, but only if they were first able to sell imported vehicles in the country.

Tesla again committed to this, and also promised to make significant investments in sales, service, and Supercharging infrastructure, according to the anonymous source.

Tesla has been lobbying the Indian government for several months to lower their import taxes, which Musk says are the highest in the world, by far. One proposal seeks the import tax rate to be reduced from 100% down to 60% for EVs over $100,000. For EVs priced below $40,000 they are seeking a reduction from 60% down to 40%.

It is not just Tesla who wants to enter the Indian market. Volkswagen, Mercedes-Benz and Hyundai have also voiced support for cuts.

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Founder and Editor-in-chief of Drive Tesla Canada | Darryn@DriveTeslaCanada.ca Have a Tesla tip? Email tips@driveteslacanada.ca, or DM us on Twitter @DriveTeslaca