Want to launch Tesla in India, but import duties too high, says Elon Musk

Tesla has written to Indian ministries seeking a big reduction in import duties on electric vehicles (Illustration: Moneycontrol)

Soon after reports emerged that Tesla is lobbying for reduced taxes in India, Elon Musk responded to Twitter users that high import rates are pushing back entry of the e-vehicle maker in the country.

Responding to Youtuber Madan Gowri’s tweet “please launch Tesla cars in India ASAP!” Musk responded with: “Want to launch Tesla in India, but import duties are the highest in the world by far of 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.”

We want to do so, but import duties are the highest in the world by far of any large country!

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

— Elon Musk (@elonmusk) July 23, 2021

Another user then took the chance to question if Tesla would go forward with locally assembled vehicles, to which Musk responded that they are “hopeful for at least temporary tariff relief”. Adding: “If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely.”

Locally assembled vehicles will be a start Elon ?

— Tesla in the Gong(@TeslaGong) July 23, 2021

On July 23, Reuters reported that Tesla has written to Indian ministries seeking a big reduction in import duties on electric vehicles (EVs).

The letter said reducing duties would “boost demand and generate revenue for the government”, sources told the agency.

The report however also noted that this is not easily achievable and would face resistance from Prime Minister Narendra Modi’s administration which has championed high import taxes for many industries in a bid to boost local manufacturing.

Notably, other luxury automakers in India have also lobbied the Centre in the past to lower taxes on imported cars but have had little success due to opposition from rivals with domestic operations.

Tesla, which aims to begin sales in India this year, said in a letter to ministries and the country’s leading think-tank Niti Aayog that slashing federal taxes on imports of fully assembled electric cars to 40 percent would be more appropriate, according to the sources.

That compares with current rates of 60 percent for cars priced below $40,000 and 100 percent for those above $40,000.

According to Tesla’s U.S. website, only one model – the Model 3 Standard Range Plus – is priced below $40,000.

Tesla registered a local company in India in January and has ramped up local hiring while also scouting for showroom space. Transport minister Nitin Gadkari told Reuters in March that India would be willing to offer incentives to ensure Tesla’s cost of production in the country is less than that in China, but only if it manufactures locally.