According to the government, a duty reduction cannot be given to a company based on its intent to invest.
Tesla’s electric vehicles (EVs) will not be eligible for an import duty cut from the Indian government.
As reported by the Ministry of Heavy Industries, “offering duty concessions after 2-3 years will be a reversal of a policy we have followed for several years.”
In addition, the source from the ministry indicated that lower tariffs could not be given to Tesla cars alone, adding that such a move would be unfair to existing players.
In July, Tesla boss Elon Musk wrote on microblogging site Twitter that India has very high import duties and that he is hopeful that at least a temporary tariff relief will be granted to EVs.
Government officials have been clear and are pushing the ‘Make in India’ initiative with full force. As a result, new EV companies have built full-scale manufacturing facilities in India, including Ola Electric.
Tesla has been advised to consider importing semi-knocked down (SKD) kits into India and assembling them locally to reduce import duties.
In comparison, fully constructed units (CBUs) are charged 60-100 percent import duty, but SKD kits pay only 25-30 percent.
The Indian government wants Tesla to start its India operations with local assembly of electric vehicles, followed by full-scale manufacturing.
On the other hand, Tesla has told the government that it is sourcing components of India for its global supply chain and intends to scale it up.