Modi government wants Elon Musk’s Tesla to ‘Make in India’ first

He said the government is not giving such concessions to any auto firm and giving duty benefits to Tesla will not augur well for other companies investing billions of dollars in India.

Tesla has sought reduction in import duty on electric vehicles (EVs) in India. In July, Tesla CEO Elon Musk tweeted that he is looking forward to ‘temporary tariff relief for electric vehicles’. Musk had said that Tesla wants to launch its cars in India soon, but Indian ‘import duty is the highest in the world than any major country!’

Currently, cars imported as Completely Built Units (CBUs) range from 60% to 100% depending on engine size and cost, insurance and freight (CIF) value less or more than USD 40,000 comes with a fee.

In a letter to the road ministry, the US firm had said the effective import duty of 110 per cent on vehicles with customs duty of over USD 40,000 is “prohibitive” for zero-emissions vehicles.

It has urged the government to standardize tariffs on electric cars to 40 per cent and withdraw the social welfare surcharge of 10 per cent on electric cars.

The company has argued that these proposals will not have any negative impact on the Indian automotive market as currently no Indian OEM produces a car (EV or ICE) whose ex-factory price exceeds USD 40,000 and only 1-2 percent of cars are sold. Ex-factory/customs value of India (EV or ICE) exceeds US$ 40,000.

Union Minister Nitin Gadkari had said that Tesla has a golden opportunity to set up its manufacturing facility in India, as the emphasis is on e-vehicles in the country.

The Road Transport and Highways Minister had said that Tesla is already sourcing various auto components from Indian automakers and setting up a base here would be economically viable.