In 2021, the US-based electric car maker Tesla demanded a reduction in import duties on electric vehicles in India. However, according to sources cited by PTI, the central government is currently not considering extending any tailor-made incentives to Tesla. While the central government is not offering incentives, states have the freedom to provide concessions to the company.
Tesla’s Interest in India
Tesla has expressed keen interest in India and is discussing the possibility of building a complete supply chain in the country. Representatives from Tesla visited India last month and held meetings with various government departments, including the commerce and industry ministry. The company is ambitious in terms of establishing a comprehensive supply chain within the country.
No Tailored Incentives from the Government
Despite Tesla’s interest, the government is not currently planning to provide any tailored incentives to the company. However, states have the autonomy to compete with each other and offer concessions if they choose to do so. The central government has emphasized that imports are not their preferred option and that the focus should be on developing domestic supply chains.
Import Duties on Electric Vehicles
Currently, imported electric vehicles in India, classified as completely built units (CBUs), attract customs duties ranging from 60% to 100%, depending on factors such as engine size, cost, insurance, and freight (CIF) value. Tesla had requested a reduction in these import duties for electric vehicles.
Progress in Selecting a Location
Tesla CEO Elon Musk announced in May that the company is making progress in selecting a location in India for a new factory. The decision on the location is expected to be finalized by the end of the year. Musk has expressed enthusiasm about the possibility of choosing India as a manufacturing base for Tesla.
Overall, while the central government is not currently offering tailored incentives to Tesla, the company remains interested in India and is exploring the establishment of a complete supply chain in the country. The final decision on the location of Tesla’s new factory is expected to be made in the coming months.
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