India is reportedly considering Tesla’s proposal to significantly reduce import duties on electric cars, which would allow the automaker to finally enter the market.
Tesla has been talking about entering the Indian market for years, but regulations have slowed its efforts.
The country is extremely protective of its domestic automobile manufacture and charges high import duties that almost double the cost of imported vehicles in the market.
Over the past year, the automaker has taken action in India and local government officials have revealed talks with Tesla executives.
Earlier this year, Tesla officially incorporated an Indian company in Bengaluru, the capital of Karnataka state in southern India.
There were indications that the automaker was considering building a factory in the country, which would bypass import duties, but more recently CEO Elon Musk said he would prefer Tesla to succeed with imported vehicles on the market before investing in a local manufacturing plant.
This has been Tesla’s approach in other market introductions, including in China, where it then built a large factory.
However, under current import regulations, it would be difficult for Tesla to succeed in the country and put investments in service centers and charging stations at risk.
The automaker has lobbied the government to reduce import duties on electric vehicles to remedy the situation.
Today, Reuters reports that the Indian government is seriously considering Tesla’s proposal:
India plans to cut import duties on electric cars by up to 40%, two senior government officials told Reuters, days after Tesla Inc’s calls for a cut polarized the country’s auto industry. country.
That would be a significant drop from the current rate of 60%, but it would only be for electric vehicles that cost less than $ 40,000, including insurance and freight.
For Tesla, that could mean the automaker could only benefit from lower import duties on its base Model 3 vehicle built in China.
But the proposal also includes lowering tariffs from 100% to 60% for electric vehicles that cost more than $ 40,000.
An Indian official told Reuters:
Reducing import duties is not a problem as few electric vehicles are imported into the country. But we need some economic gain from it. We also need to balance the concerns of national actors.
Daimler and Hyundai have backed Tesla’s proposal, but domestic manufacturers including Tata Motors are opposed
We are still talking here about significant import duties of 40 to 60%. It won’t make Tesla, or any imported electric vehicle, super competitive in the country.
But it might be enough for Tesla to build a small market in the country, deploy service centers and supercharging stations, and if successful enough, it might decide to build a local factory.
That’s pretty much exactly what happened in China with Gigafactory Shanghai, which was a big hit for Tesla and China.
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