Elon Musk's Tesla Inc. requested tax reductions for importing electric cars
Government again turned down Tesla's request for tax relief
Tesla has been urged to produce in India by Prime Minister Narendra Modi's administration, and Musk wants India to decrease import duties — which may be as high as 100% on electric vehicles — so that the business can sell automobiles built elsewhere at competitive pricing first. It does, however, levy import tariffs of 15-30% on parts delivered for assembly in the country.
Elon Musk's Tesla Inc. requested tax reductions for importing electric cars, but India declined, claiming that rules already enable partially-built vehicles to be imported and assembled locally at a reduced rate.
“We looked at whether the duties need to be re-jigged, but some domestic production is happening and some investments have come in with the current tariff structure,” In an interview on Thursday, Vivek Johri, head of the Central Board of Indirect Taxes and Customs, remarked.“So, it is clear that this is not a hindrance.”
Even after the government requested it, Tesla has yet to offer a plan for local production and procurement from India, according to Johri. Even though the western state of Maharashtra — home to financial hub Mumbai — officially backed Tesla's proposals, no tax benefits for the cleaner but imported automobiles were included in the federal budget earlier this week.
Tesla could follow in the footsteps of indigenous firms like Mahindra & Mahindra Ltd. and Tata Motors Ltd., which are investing in local electric vehicle capacity. Johri said. “There are others importing completely built units. That route is open,” he said.
Tesla will also face competition from Mercedes-Benz, which plans to launch the EQS — an electric version of its premium S-Class sedan — in India by the fourth quarter of this year. Electric vehicles account for less than 1% of total sales in India, highlighting a huge opportunity for EV-makers in the world's second-most populous country. Indian roads are still dominated by cheap, petrol- and diesel-powered cars made by local units of Hyundai Motor Co. and Suzuki Motor Corp.
Tesla previously stated its intention to enter India as early as 2019, but Musk claimed that local regulations prevent him from testing the waters first with imports, citing high taxes as a reason for the Tesla cars being "unaffordable." An Indian minister announced in October that he had ordered Tesla to stop selling cars built in China in India and instead manufacture, sell, and export vehicles from a local manufacturer.
“Some investment has already come in with the current tariff structure. So why can’t others also come in?” Johri said. “There are other foreign brands also which are being sold in the country with the current tariff structure.”
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