Centre mulls lowering import duty for Tesla if it manufactures in India

Days after Elon Musk flagged high import duties in India, reports suggest that the government is considering lowering import duty and offering other incentives to Tesla if it decides to manufacture its cars in the country. Tesla had approached the government to seek reduced customs on its cars. It had reasoned that these cars should not be treated as luxury automobiles.

A person in the know said that any decision in this regard will be for the entire sector and not for one company only. "We will be open to consider, especially if they will set up a manufacturing place here," said the official, as mentioned in a report in The Economic Times.

In an attempt to boost the electric vehicle ecosystem, the government has offered multiple incentives for production in the country. For instance, goods and services tax (GST) on electric vehicles has been reduced to 5 per cent from 12 per cent, while tax on chargers and charging stations has been reduced to 5 per cent from 18 per cent.

Consumers will also get incentives for the purchase of electric vehicles through a reduction in price. There will also be a reduction in income tax of Rs 1.5 lakh on interest paid.

The government is also in touch with global companies to set up production plants in the country.

Responding to a tweet on when Tesla will enter the Indian market, Musk recently said, “We want to do so, but import duties are  the highest in the world by far of any large country! Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India. But we are hopeful that there will be at least a temporary tariff relief for electric vehicles. That would be much appreciated.”

The company had recently introduced the Hindi language in its infotainment UI. Tesla had also elevated Prashanth R Menon as director of India operations in May.

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