Tesla Mate

India may lower import duty for Tesla vehicles, but on one condition

The government said it may consider reducing import duty for Tesla as Elon Musk’s company gears up to sell electric vehicles in India. But the government has one condition. Here is all you need to know.

The central government has said it may consider lowering import duty and other incentives for Tesla, which is expected to soon start selling its electric vehicles in India. The development comes days after Tesla CEO Elon Musk raised concern over high import duties charged by the country.

However, the consideration will only be taken up when if the company decided to manufacture its cars in the country, according to a senior government official quoted in an ET report. Tesla had approached the government earlier to seek a reduction on its cars, adding that they should be treated as electric vehicles and not luxury automobiles.

“We will be open to consider, especially if they will set up a manufacturing place here,” the senior official told ET. The official, however, made it clear that any decision on the matter will apply to the entire sector and not just a particular company.

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import duty for Tesla vehicles

The government has announced multiple incentives in the past for companies that produce electric vehicles in the country. One of the moves, for instance, is the reduction of goods and services tax (GST) on electric vehicles from 12 per cent to 5 per cent.

The tax on chargers and charging stations for electric vehicles was also reduced to 5 per cent from 18 per cent.

The government has not only incentivised local production of electric vehicles but also introduced tax benefits for people who buy electric cars. Under the scheme, buyers are eligible for an upfront reduction in price and an income tax deduction of Rs 1.5 lakh on interest paid towards loans taken for the purchase of electric vehicles. However, there is no such incentive for selling or buying imported vehicles at the moment.

Tesla has sought a 40 per cent reduction on fully assembled electric cars, according to an ET report from last week.

The current rate applicable is 60 per cent for electric vehicles prices below $40,000 and 100 per cent for anything above. The company has reportedly flagged the issue in a letter to various government ministries and departments.

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It may be noted that India’s current import duty structure does not differentiate between electric cars and those that run on traditional fuels.

Even Elon Musk has tweeted highlighting the high import duties charged by the country on electric vehicles. Responding to a tweet on when Tesla will enter the Indian market, Musk said, “We want to do so, but import duties are the highest in the world by far from any large country!”

“Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India,” he added.

“But we are hopeful that there will be at least a temporary tariff relief for electric vehicles. That would be much appreciated.”

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