The road to Tesla’s official presence in India appears to be clearing as the local government contemplates a policy overhaul for electric vehicles, with early 2024 on the horizon as a potential approval date.
The Indian government is on a trajectory to grant its approval for Tesla’s future ventures within the country by January 2024. Recent discussions within government departments have revolved around changes in policy pertaining to electric vehicle manufacturing, with Tesla’s investment proposal taking center stage.
“Though the agenda of the meeting was centered on general policy matters, fast-tracking approvals by January 2024 to Tesla’s proposed investment in the country was [spelled] out,” revealed an official from the Indian government.
According to sources cited by The Economic Times, high-ranking officials from the Prime Minister’s Office recently convened to deliberate over various policies, including the crucial matter of import duties on electric vehicles. Tesla’s India aspirations had previously hit a roadblock when the local government declined to reduce import duties on electric vehicle (EV) manufacturer’s cars.
Tesla had sought to secure a reduction in import duties to 40% for its EVs assembled outside India. However, the country’s regulations stipulate specific duties for imported vehicles, imposing a 60% duty on all vehicles valued below $40,000 and a 100% rate on cars exceeding the $40,000 mark. India’s customs duty system does not discriminate between electric vehicles and conventional hydrocarbon-fueled cars. The prevailing policies aim to promote local manufacturing while imposing substantial duties on imported vehicles.
In its pursuit of establishing a foothold in the Indian market, Tesla has engaged in negotiations with Indian authorities. The electric vehicle manufacturer’s strategy involved test-marketing its vehicles from Giga Shanghai in China before embarking on local manufacturing in India. In this endeavor, Tesla sought to reduce import duties in India and gain recognition for its cars as electric rather than luxury vehicles.
India’s existing import policies present significant challenges to the approval of Tesla’s investment proposal. Nevertheless, the Indian government is actively crafting a fresh policy that could address these challenges, while simultaneously stimulating local electric vehicle manufacturing for any company interested in investing in India.
“An entirely new category may be introduced in the import policy to ensure that environmentally friendly vehicles are subject to lower taxes,” explained an official. This prospective policy adjustment is not exclusively tailored for Tesla but is designed to support any entity committed to establishing electric vehicle manufacturing units within the country.
