Amid worries expressed by Indian automakers over potential import duty discounts to American automaker Tesla, government officials declared that whatever incentives India grants to support local manufacturing of electric vehicles will be equal for both domestic and foreign investors.
According to ET, senior government officials with knowledge of the matter, Tesla has requested temporary tariff concessions to establish a manufacturing facility in India; however, New Delhi is opposed to any exemptions that would be company-specific. “We have very strong domestic companies in this sector, so the government’s approach is for the industry as a whole and not for any specific company,” an official stated, adding that any advantages granted would be the same for international and domestic investors.
The government is currently developing a policy to encourage domestic production of electric vehicles at a time when Vietnamese competitor VinFast and US electric vehicle manufacturer Tesla are solidifying their plans to enter the Indian market. Local automakers claim that providing Tesla with concessional tariffs will negatively affect their investments in the production of electric vehicles, even if regulatory parameters have not yet been finalized.
Although the industry has not yet officially objected to the government, a senior industry executive who wished to remain anonymous stated that several automakers are worried that any decrease in import duties will give an unfair advantage to the American automaker, which has not yet made significant investments in this country.
In addition to domestic auto giants like Tata Motors and Mahindra & Mahindra, which currently manufacture EVs in the country, other businesses like Maruti Suzuki and Hyundai-Kia have made large investments to establish plants for assembling batteries and battery packs, and they plan to introduce over a dozen electric vehicles into the market by 2030. Maruti’s parent company Suzuki Motor Corp has pledged to invest ₹7,300 crore in building a battery plant in Tamil Nadu, while Hyundai has promised investments of ₹20,000 crore in the state.
Under the auspices of the Ministry of Commerce & Industry, the Department for Promotion of Industry and Internal Trade has been holding high-level talks to implement a plan that will subsidize manufacturers of electric four-wheelers based on the investments they make in creating vehicles in the nation. The government believes that local production will reduce total automobile prices and create more jobs.
However, it has been reported that Tesla is attempting to have the customs levy on imported cars reduced until local production starts up. As of Sunday afternoon, ET’s emails requesting comment from Tesla and the Ministry of Commerce & Industry had not received a response.
Consultations are currently underway to ascertain the minimum investment that automakers must make to qualify for the new program’s incentives, which aim to support domestic production.
While attending the third Indo-Pacific Economic Framework in San Francisco last week, Minister of Commerce and Industry Piyush Goyal stopped by Tesla’s Fremont, California, factory and spoke with the company’s senior executives. Visited @Tesla’s cutting edge production facility in Fremont, California,” Goyal wrote in a post on the social media app X. We are incredibly happy to see that bright Indian engineers and finance professionals are contributing to Tesla’s incredible quest to reinvent mobility in senior roles. I am also pleased to observe that Indian auto component suppliers are becoming more and more significant in the Tesla EV supply chain. It is en route to double its imports of Indian components. I hope Mr. @ElonMusk has a quick recovery because I missed his captivating presence.”
But Goyal made it clear that the decision about the carmaker’s entry into the Indian market was still pending.
After meeting with Prime Minister Narendra Modi in June in New York, Elon Musk, the CEO of Tesla, hinted that his company would establish a manufacturing base in India shortly. Musk had stated at the time, “I am confident that Tesla will be in India… as soon as humanly possible.”