Tax Relief

Middle Asks Tesla to Manufacture Vehicles in India Earlier than Gaining Tax Breaks: Report

The Union government has asked Tesla, owned by Elon Musk, to manufacture its green vehicles in India to be considered for tax breaks, sources have revealed. The company, which plans to bring cars to market in India, has raised concerns about high import tariffs on electric vehicles (EVs), which would drive the cost of its cars to unimaginable levels.

According to PTI sources, the center has made it clear that the government does not make such concessions to any auto company. The Department of Heavy Industry has stated that granting tariff breaks to the Elon Musk-led company doesn’t send a good signal to other companies that have invested billions of dollars in India and manufacture their vehicles domestically. In a “Make in India” initiative, the center asked the electric car manufacturer to start production in India first.

Tesla India launch soon?

The government’s response comes after Tesla wrote a letter to the Ministry of Roads calling for it to standardize the tariff for electric cars to 40 percent and to abolish the 10 percent social surcharge for electric cars. It is important to mention that the import duty on electric vehicles in India is 100% if the CIF (cost, insurance and freight) value is more than $ 40,000, or 60% if the CIF value is less than $ 40,000. As a result, the high import duties are affecting the price of Tesla cars, which could significantly shrink its market in India.

However, the government allows manufacturers to import and sell 2,500 cars each year without having to undergo homologation in India. According to the regulations changed in 2018, it would be sufficient to have a certificate of conformity from the country of origin. However, Tesla has already decided to decide and complete the homologation phase for four vehicle models for which it has applied for approval in India. Tesla India Motors and Energy, the Indian subsidiary of Tesla Inc., has secured approvals for four of its car versions, according to the center-controlled Vahan Sewa. Although there is no mention of which models or versions received the approvals, Tesla test cars such as the Model 3 and Model Y were previously tested on Indian roads.

Last month, Musk said he was “hopeful” that the green cars could enter Indian markets with the help of “temporary tariff relief” from the Indian government. The US electric car manufacturer Tesla set foot on Indian soil with an R&D unit in the city of Bengaluru in Karnataka in January 2021.

(With agency entries)

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