Indian government might be considering lowering the import tax on electric vehicles for automakers that partner with a local manufacturing unit. As of now, the import tax on EVs in India is 100% for cars that cost more than Rs. 33 lakhs and 70% for the rest.
As per report, if the new policy is implemented, electric vehicle makers may have to pay an import tax as low as 15% to the Indian government.
This comes after Tesla is planning to enter the domestic market in India.
The Commerce Ministry of India and Tesla have not yet comment on the plan.
Finance Minister Nirmala Sitharaman also said that there is “no proposal in front of me” to reduce import duties on EVs.
If the Indian government reduces import taxes on electric vehicles, it will also lower the cost of these vehicles in the domestic market.
This could force local carmakers to start manufacturing more EVs, as they will be more competitive with import models.
The lower import taxes would also encourage other global automakers to enter the Indian market, which is the third-largest car market in the world.
This could be a major boost for the Indian EV market, which is still in its early stages of development.
Tesla has been trying to enter the Indian market for many years.
In 2021, Tesla tried to persuade the Indian government to lower the import duty on electric vehicles (EVs) from 100%.
So, the talks between Tesla and the government collapse when the government insisted that Tesla commit to local manufacturing first.
Tesla has told Indian officials that it is willing to set up a local factory in India and produce a new EV price around Rs. 20 Lakhs.
This would be roughly 25% cheaper than Tesla’s current entry-level model.
The new EV would be for both the Indian market and export.
Rahul Ram Dwivedi (RRD) is a senior journalist in 2YoDoINDIA.
NOTE : Views expressed are personal.