Govt asks Tesla for manufacturing plans, local sourcing details before tax cuts  

Indian government has reportedly asked Elon Musk-helmed Tesla Inc to ramp up local procurement before its requests to lower import taxes are met. Tesla officials are said to have met government officials earlier this month.

The government has asked the company to increase local procurement and share in detail its manufacturing plans before any tax demands are considered, according to a report in Bloomberg. The Ministry of Heavy Industries and Ministry of Finance sought the details from Tesla in the meeting. The ministries also asked Tesla for its thoughts on importing fully built cars versus so-called knocked-down units or partially built vehicles that attract lower levies.

The US-based auto giant had asked the government in July to lower import duty on electric cars to 40 per cent from the current 60 per cent and 100 per cent. Currently the rates are 60 per cent for cars priced below $40,000 and 100 per cent of those above $40,000. Only one model of Tesla, Model 3 Standard Range Plus, is priced below $40,000, meaning that it would need to pay as much as 100 per cent for the rest in the country.

Tesla also asked for the 10 per cent social welfare surcharge levied on all imported cars to be scrapped. The surcharge is imposed to help fund health and education programmes.

The report stated that Tesla claimed to have procured components worth $100 million so far from India. It further suggested that that figure would increase if any tax concessions are offered. It also pledged to make significant direct investments in sales, service, and charging infrastructure. Broader investments in manufacturing are also on the cards once Tesla enters India.

While Musk has been showing willingness to bring Tesla to India, he has also said that the import duties in India are, by far, the highest in the world.

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