For Elon Musk’s Tesla to potentially enter India, the Indian government is actively striving to expedite the licensing process. By January 2024, they hope to have all the certifications in place. The Prime Minister’s Office recently evaluated the next stage of electric vehicle (EV) manufacturing in India, including Tesla’s investment proposal, according to an ET article.
According to a top official, the meeting focused on the urgency of approving Elon Musk’s Tesla proposed investment in India, even if the main topics of conversation were general policy. After Prime Minister Narendra Modi and Tesla CEO Elon Musk met in the US during Modi’s state visit in June, several ministries, particularly those dealing with heavy industry, electronics, and IT, have been discussing Tesla’s future ambitions.
According to a top official, the meeting focused on the urgency of approving Tesla’s proposed investment in India, even if the main topics of conversation were general policy. After Prime Minister Narendra Modi and Tesla CEO Elon Musk met in the US during Modi’s state visit in June, several ministries, particularly those dealing with heavy industry, electronics, and IT, have been discussing Tesla’s future ambitions.
It is noteworthy that US President Joe Biden has been invited by India to be the chief guest for the Republic Day celebrations on January 26.
The Indian government and senior Tesla officials have been in communication on the establishment of auto and battery manufacturing plants in India. Additionally, Tesla has indicated an interest in introducing its supply chain ecosystem to the nation.
Another person informed the Financial Daily that government ministries have been charged with working out any snags with Tesla to enable the unveiling of the company’s India production plan as soon as feasible.
The government wants to bring Tesla to India more quickly.
The structure of import duties has been a major source of dispute. Previously, Tesla had asked for a 40% import duty on fully completed electric cars, as opposed to the current rates of 60% for automobiles under $40,000 and 100% for cars over that amount.
To differentiate its completely completed electric cars as electric and not luxury vehicles, Tesla has requested a 40% import charge on such vehicles. India’s customs duty regime levies significant taxes to encourage homegrown manufacturing while treating hydrocarbon-powered and electric vehicles equally.
Prior to setting up a local production facility, the US-based electric vehicle maker has stated that it would like to start selling automobiles in India.
The introduction of a new import policy category that would result in reduced taxes for ecologically friendly automobiles is being considered as a solution to this problem. Officials emphasize that this possible incentive would be available to any organization that is dedicated to establishing facilities for the production of electric vehicles, not just Tesla.
The lack of progress in the negotiations for a decrease in import duties caused Tesla to abandon its prior intentions for India. Prior to any import tariff reductions, the Indian government had insisted on a pledge to support domestic manufacturing. Furthermore, the government supported Tesla’s application for the production-linked incentive program, which provides manufacturers with direct subsidies rather than reductions in customs duties.