Tesla is lobbying India for lower import taxes on electric vehicles. The company has written to Indian ministries to request this significant reduction in import duties.
Tesla is likely to set up a factory in India with imported vehicles, according to statements by Elon Musk on Twitter. However, the electric carmaker’s talk of lowering tariffs is likely to meet resistance from Prime Minister Narendra Modi’s administration. The latter defends high import taxes for many industries in order to boost local manufacturing.
“We want to do it, but import duties are by far the highest in the world of any major country,” Musk said in response to a tweet about the company’s car launch in India. “But we hope there will be at least temporary tariff relief for electric vehicles,” Musk added.
The group, which plans to start sales in India this year, said in a letter to various government departments and the country’s leading think tank, Niti Aayog, that a reduction in federal taxes on imports of fully assembled electric cars to 40% would be more appropriate.
Currently the rates are 60% for cars priced below $40,000 and 100% for those priced above $40,000. “The argument is that with a 40% import duty, electric cars can become more affordable, but the threshold is still high enough to force companies to manufacture locally if demand picks up,” an anonymous source told Reuters.
For now, Niti Aayog has not given a response. The ministries Tesla wrote to included the transport and heavy industries ministries, which did not immediately respond to a request for comment.
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