Tesla: Tesla ready to launch in India, import duty stuck

Musk has been expressing his ambition for the last several years regarding the launch of Tesla in India. But strong import tariffs have made Tesla’s launch difficult. Musk has repeatedly expressed his interest in setting up a base in India but the country’s high import duties have come as a hindrance to Tesla’s plans. The company was expected to start its operations here by early 2021.

In this sequence, Tesla also registered its Indian branch in Bengaluru in early 2021 under the name Tesla India Motors & Energy. It also appointed three directors for the company. The then government of Karnataka announced that the OEM would open its first factory in their state, while an R&D unit was set up in Bengaluru. During this, Nitin Gadkari said that the country is ready to give incentives to the EV giant to reduce its production cost. Tesla began lobbying the Indian government extensively to reduce import duties on electric vehicles. It asked ministers and government think-tank NITI Aayog to reduce federal taxes on fully assembled cars priced below $40,000 to 40%, making its EVs more affordable in India.

In the beginning of 2022, the ministers of Telangana, Maharashtra and West Bengal invited Musk to set up Tesla’s factory in their respective states, to which Musk replied, “Still with many challenges with the government.” working in the middle”. Then in a fresh blow to Tesla, Vivek Johnery, chairman of the Central Board of Indirect Taxes and Customs of India, said that the rules do not allow tinkering with the tax structure. Thus Tesla was suggested to import partially built models and assemble them locally to reduce costs. After this, Tesla had put its India EV plan on hold.

After one year in May 2023, a group of senior Tesla executives visited India and met PM Modi as well as other federal government officials with a new proposal to set up a Giga factory in India. The agenda of the meeting was to discuss local sourcing of components for its models as well as batteries. Tesla said its India manufacturing center will also be used to export the model to Asia and other markets. It is expected that soon the place for the factory will be decided. PM Modi met Musk for the second time this year during his US tour. Musk officially expressed his interest in investing in India. Both the sides discussed ways where EV manufacturers can set up their factories in the country. Musk plans to visit India in 2024 to take the talks forward.

At present, Elon Musk’s electric car maker Tesla has agreed to the government’s suggestion to set up a vendor base in India. Asked the company to start assembly of electric cars in India and thereafter set up a seller base. According to the latest reports, Tesla has stopped short of pressing the government to reduce the import duty on completely built units, which stands at 100 per cent for cars priced at $40,000 and above. The import duty on low-cost cars is 60 per cent. Earlier, Tesla was demanding the Indian government to reduce it by 40 per cent. However, on May 28, Musk said that his company would not manufacture its electric cars in India unless it was first allowed to sell and service them locally.