The Indian government is making significant efforts to attract Tesla, Elon Musk’s electric vehicle (EV) company, to the Indian market. In its latest move, the government is considering reducing import tariffs on completely built-up EVs (CBUs), which currently face a hefty 70 percent import duty for those priced below $40,000 and a 100 percent duty for those priced above $40,000. Negotiations have been ongoing, and there are indications that a prominent US EV manufacturer, likely Tesla, is considering establishing a manufacturing unit in India. This potential tax reduction on imported EVs aligns with the government’s broader strategy to facilitate the entry and growth of electric vehicles in the country.
Currently, cars that are completely built-up (CBU) and priced below $40,000 face a high import duty of 70 percent, while those above $40,000 face an even steeper 100 percent duty. There’s talk that the government is considering a significant reduction, possibly down to 15 percent for all electric vehicles, regardless of their price. Yet, it’s important to note that no official decision on this change has been made.
Elon Musk is pushing forward with discussions in India, planning to meet with Union Minister Piyush Goyal to talk about Tesla’s potential manufacturing and the country’s electric vehicle (EV) policy. Sources suggest that Tesla has been seeking tariff concessions, especially during an interim period, with a possible “sunset clause.” The government aims to create a comprehensive package beneficial for India without favoring a single company, encouraging others to capitalize on the opportunity, provided they meet certain requirements.
Recent reports reveal Elon Musk’s scheduled meeting with Minister Piyush Goyal, focusing on India’s developing policy that may allow automakers to import fully built EVs at a reduced 15 percent tax rate, down from the existing 100 percent. However, it’s essential to highlight that this policy is still in the works.
In 2021, Tesla abandoned its plans to enter the Indian market due to unresolved talks on import duties. The government’s emphasis on local manufacturing and proposed benefits, along with suggestions to apply for incentives, contributed to the discussions’ inconclusiveness.