Tesla's ambition to enter into the Indian market hits a setback as the government dismisses any plans for subsidies on imported electric vehicles.
Minister of State for Commerce and Industry Som Parkash has addressed a parliamentary inquiry by confirming that there are no plans to grant exemptions from local value addition costs or subsidies on import duties for electric vehicles in India.
Parkash highlighted the government's policy initiatives to foster industrialization, domestic value addition, and global competitiveness in India.
This comes amid recent media reports suggesting alignment between Tesla's Elon Musk and the Indian government on providing tax breaks to encourage electric car manufacturing in India.
Tesla and the Indian government faced a year-long deadlock. The electric car manufacturer sought reduced taxes to sell its externally manufactured vehicles at competitive prices in India initially, while the Modi government insisted on Tesla commencing local manufacturing.
The government's emphasis on local manufacturing clashes with Tesla's preference for lower import taxes initially to enhance competitiveness in the Indian market.
Elon Musk, during Prime Minister Narendra Modi's US visit in June, expressed Tesla's readiness for a "significant investment" in India, with negotiations centred on securing reduced import taxes upfront.
The government has implemented several measures to encourage both domestic and foreign investments in India, fostering local value addition as part of the Make in India initiative. These efforts encompass initiatives such as the introduction of Goods and Services Tax, corporate tax reduction, enhancements in ease of doing business, reforms in FDI policies, reduction of compliance burdens, and strategies to stimulate domestic manufacturing through public procurement orders. Additionally, programs like Phased Manufacturing Programme (PMP) and Quality Control Orders (QCOs) have been instituted to further these objectives.
In addition to the mentioned initiatives, Minister Som Parkash highlighted the government's introduction of the Production Linked Incentive (PLI) Scheme for the automobile and auto component industry, allocating a budget of Rs. 25,938 crore. This scheme aims to offer financial incentives to support domestic manufacturing of advanced automotive technologies (AAT) products, encompassing electric vehicles and their components.
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