Tesla, owned by Elon Musk, received a setback as the Government of India declined a subsidy on the import duty of electric vehicles.
The government levies taxes on electric vehicles or EVs that are imported from other countries. Tesla is the world leader in manufacturing EVs. The company had earlier sought a tax break from the government so that it could start manufacturing in India. Tesla offered the proposal to the govt to fulfil its aim to make EVs in India and start selling here. The govt declaration may hamper the plans to sell Tesla in India.
Govt Refuses to Give Subsidy Blocking the Entry of Tesla in India
At present, automobile companies must pay an import duty of 70-100% for importing electric vehicles from other countries.
According to a recent update, the government does have plans to reduce this tax. The concerned minister, Som Prakash confirmed this in the parliament on 13th December. He is the Minister of State for Commerce and Industry. The minister gave a written reply related to this issue in response to a question. He further clarified that the government does not intend to forego the price of local value addition or offer a subsidy.
The statement of Som Prakash is especially relevant because the media had reported earlier that the government may consider Tesla’s proposal to reduce tax and import duty on electric vehicles that foreign countries make in India. There were speculations that Tesla and the Indian government thought on similar lines.
How Will This Impact the Business of Tesla in India
This will impact Tesla’s ambitious plan to open a factory in India and build electric vehicles locally. The carmaker may consider postponing manufacturing and selling in the country.
The government’s recent decision to not give rebates in tax and import duty is unexpected. This is especially important in the background of the policy to allow global automobile manufacturers to import electric vehicles by relaxing the tax they need to pay for them.
Govt Encouraging Local Manufacturing of EVs in India
The Govt of India is encouraging automakers to manufacture electric vehicles locally in India. It has started an incentive program for this aim in 2021. The program has a budget of $3.1 billion. Bloomberg has reported that the government is also granting financial incentives for manufacturing batteries for electric vehicles locally.
Tata Motors Sells the Most Electric Cars in India
Tata Motors sells the maximum number of electric cars in the country currently. The company manufactures its car by the name Nexon EV. This electric car from the Tata Motors brand sells the most in India right now and it is quite successful.
MG Motors has introduced electric cars that it makes in the Indian market of late. However, it has failed to get the same success that Tata Motors has achieved in selling electric vehicles.