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Centre unlikely to offer import duty concessions to Tesla: Report

The present customs duty regime in India does not distinguish between electric cars and those that run on hydrocarbons and imposes high duties


Tesla Inc. signage outside a dealership at the Easton Town Center shopping mall in Columbus, Ohio, U.S., on Friday, Dec. 10, 2021. Photo: Luke Sharrett/Bloomberg

BS Web Team New Delhi

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The Centre is unlikely to offer any import duty concessions to Elon Musk’s Tesla unless the company considers local investment, a report by the Economic Times (Et) said.

In an effort to revive plans for India, Tesla officials have contacted numerous government agencies. “They (Tesla) have approached us,” said an official of the heavy industries ministry.

Tesla is aiming to sell its popular electric cars in the Indian market.

The company had asked for a 40 per cent import duty on fully assembled electric cars as opposed to the current rates of 60 per cent on cars under $40,000 and 100 per cent on those over that price, the report said.

The company prefers that its cars be treated as electric vehicles rather than luxury cars.

The present customs duty regime in India does not distinguish between electric cars and those that run on hydrocarbons, and imposes high duties in order to encourage local manufacturing.

Prime Minister Narendra Modi has identified clean energy and electric vehicles as key focus areas, which are being encouraged through a variety of incentives.

Tesla dropped its India plans after failing to make progress in talks over import duty reduction. New Delhi had insisted on a commitment to local manufacturing in exchange for any import duty concession. The government had also asked that the company apply for the production-linked incentive scheme, which provides direct subsidies to manufacturers.

In response to a question about any possible relaxation for Tesla, the official said, “We are not contemplating any duty cut. We are also in talks with several other countries, and free trade agreements with the United Kingdom are being negotiated. Talks are also on with Germany. But no duty cuts are being considered.”

According to official data, the industry received $33.77 billion in foreign direct investment (FDI) from April 2000 till September 2022, accounting for about 5.48 per cent of the total FDI inflows during the period.

Officials further said that existing benefits available to the automobile sector can be availed by Tesla, as well.

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First Published: May 18 2023 | 3:58 PM IST

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