Tesla India gets new hope as officials shift gears and consider EV import tax reduction

Tesla Model X in India
The first Tesla imported into India in 2017

Just days after initially saying there was no chance of reducing import taxes on electric vehicles (EVs), government officials in India are saying they are now considering the option.

According to two senior government official who spoke to Reuters, the proposal could see import taxes could be reduced by as much as 40%.

Under the proposal, higher price EVs above $40,000 (including the car’s cost, insurance, and freight) would see their import tax rate reduced from 100% down to 60%. The import tax reduction for EVs priced below $40,000 would be less, from 60% down to 40%.

The final details are still being decided, according to one of the sources.

“We haven’t firmed up the reduction in duties yet, but there are discussions that are ongoing,” one of the officials said.

The possibility of a reduction in import taxes seemed unlikely just a few days ago. While speaking to parliament Krishan Pal Gurjar of India’s Ministry of Heavy Industries said in no uncertain terms that a reduction was not being considered.

Part of the reason there has been pushback to the idea of reducing import taxes for the US automaker is due to the government’s efforts to increase domestic manufacturing. However, CEO Elon Musk has said if they are able to first sell their imported vehicles in India, his company would build a factory in the country, which appears to have helped.

“Reducing import duties is not a problem as not many EVs are imported in the country. But we need some economic gain out of that. We also have to balance the concerns of the domestic players,” the official said.

Tesla has been taking steps this year to officially launch in India. Earlier this year the company incorporated in the country and has been seeking locations for their first showrooms

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