Tesla is taking the next steps in its plans to invest in India. According to a report, the company will start with an investment of $500 million if the government agrees to cut taxes on imported cars.
According to a report in the Economic Times, Tesla plans to invest up to $2 billion to build a factory in India, per rumors that surfaced last week. However, more details have now emerged about the potential deal. It is reported that the implementation of these plans depends on whether the Indian government reduces import duties to 15% in the first two years.
The Tesla delegation began negotiations with India several months ago. The country’s Prime Minister, Narendra Modi, also met with Elon Musk as part of his visit to the US this year. In August, it was reported that India is working on a new electric vehicle policy. Its goal was to significantly reduce import tariffs for companies, subject to commitments to local production. The proposed policy could reduce import duties by up to 15%, which is huge. Currently, vehicles that cost more than $40,000 are taxed at 100%, while other vehicles are taxed at 70%.
According to an Economic Times report, Tesla is willing to initially invest around $500 million if the government agrees to a tariff rate cut for 12,000 cars. If this concession were extended to 30,000 vehicles, Tesla would be willing to increase its investment to $2 billion.
The Indian government is currently assessing Tesla’s proposal and the viability of the proposed investment at $2 billion. According to information about the discussions, the number of cars that can be imported at the lower tariff rate is expected to be reduced compared to Tesla’s proposal.