Tesla proposal leads India to contemplate reducing import taxes: report

Key Points

  • 💡 India considering reduced import taxes for automakers producing vehicles in the country.
  • 🚗 Tesla’s attempt to enter the Indian market hindered by high import taxes (100% for vehicles over $40,000).
  • 📊 India’s updated policy might allow for lower tax rates (as low as 15%) on imported cars.
  • 🤝 Government showing interest in Tesla’s proposal, but policy still in initial deliberation stage.
  • 🌱 Lower import taxes could help Tesla sell its full vehicle lineup in India.
  • 🚀 Tesla contemplating a low-cost electric vehicle production in India (~$24,000 price range).
  • ⏳ Government cautious due to potential impact on domestic auto market, risking disruption for local players like Tata and Mahindra.

Tesla’s potential entry into the Indian market seems to be progressing. According to a recent report, India is contemplating a policy shift that would lower import taxes for automakers willing to manufacture some of their vehicles within the country. This development follows a proposal made by Tesla.

Tesla has long aimed to establish a presence in India but has faced challenges due to the country’s high import taxes, which currently stand at 100% for vehicles costing over $40,000. For instance, Tesla’s popular Model Y crossover, priced at $47,740 before tax credits in the United States, has been hindered by these taxes.

According to a Reuters report, the revised policy being considered by India could enable automakers to import fully assembled cars with significantly reduced tax rates, possibly as low as 15%. Citing a source familiar with the matter, the publication highlighted that the government is receptive to Tesla’s proposal. However, the policy is still in its preliminary stages of discussion, and the proposed tax rate could still be subject to change.

“The government is showing interest, and there is an understanding with Tesla’s proposal,” stated the source. Another individual mentioned by the report suggested that the lowered import taxes might benefit Tesla in offering its entire vehicle lineup in India, not solely the most popular models. Notably, Tesla is reportedly contemplating the production of an affordable electric vehicle in India, priced around $24,000.

While the news is promising, an official also cautioned that the government might not expedite the process. This is due to the potential disruption such changes in import taxes could pose to India’s domestic auto industry. There is a risk of adversely affecting local players like Tata and Mahindra.

“The government is keen on having Tesla, but this matter will undergo extensive deliberations due to its potential impact on domestic players,” noted the official.

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