New Delhi: India is considering slapping import duties in electric cars up to 40%, two senior government officials told Reuters, days after the Tesla Inc.
application for the coillarized automotive industry cuts.
For imported electric vehicles (EV) with a value of less than $ 40,000 – including the cost of cars, insurance, and shipping – the government is discussing cutting the tax rate to 40% of the current 60%, officials told Reuters.
For EV worth more than $ 40,000, he saw cutting the level to 60% of 100%, they said.
“We have not tightened the reduction of duties, but there is an ongoing discussion,” said one of the officials.
India is the fifth largest car market in the world with an annual sales of around 3 million vehicles but the majority of cars are sold at prices below $ 20,000.
EVS forms a small portion of the total luxurious EV sales neglected, according to industry estimates.
Tesla, in the tone to the government – first reported by Reuters in July, argues that reducing import duties to EVS to 40% will make them more affordable and increase sales.
It triggered a rare public debate among the car makers of whether such a measure would conflict with Indian boost to improve domestic manufacture.
Even so, the government supports cuts if you can see companies such as Tesla which benefits the domestic economy – producing locally, for example, or giving a firm timeline at that time, one of the officials said.
“Reducing import duties is not a problem because not many EVs are imported in this country.
But we need economic benefits from it.
We also have to balance the worries of the domestic players,” the official said.
CEO Tesla Elon Musk said on Twitter last month that a local factory in India was “quite possible” if the company succeeded with imports of vehicles but taxes on them high.
The second official said that because the task pieces were considered only for EVS and not another category of imported cars, it should not be a concern for domestic car makers – which mainly produce affordable gasoline cars.
The Ministry of Finance and Trade, and Federal Think Tank Niti Aayog, chaired by Prime Minister Narendra Modi, are discussing proposals and all stakeholders will be consulted, the person added.
Both sources do not want to be identified because the discussion is still personal.
Trade and Ministry of Finance and Niti Aayog did not immediately comment.
Automakers including Mercedes-Benz Daimler and Audi have for years lobbied for lower import duties on luxury cars but facing strong resistance especially from domestic companies.
As a result, Indian luxury car markets remain small with an average sale of around 35,000 vehicles per year.
Tesla cars will fall into the high-end EV category, which is mainly imported into India and contributed a much smaller percentage of sales.
Mercedes, Jaguar Land Rover and Audi sells EVS imported luxury in this country.
This time Tesla’s demands have found support from Mercedes and South Korean car makers of Hyundai Motor, which have around 18% of Indian car market share.
Opposing the proposed cutting is Tata Motors, which produces an affordable electric car in the country, and Softbank supported by Ola group, which makes electric scooters in India.
The third source that is familiar with the government’s thinking says there is awareness that brands like Tesla can make electric cars more easily penetrated in India, which prostit out the other major car markets in EV sales.
The government is thinking of the best way to approach this and they want to see some benefits even if it only means Tesla promises to find parts in the country, said the person.