Tesla, the renowned global leader in electric vehicles (EVs), is currently reevaluating its plans to establish a manufacturing facility in India to cater to both the domestic market and exports. However, during a recent meeting with high-ranking government officials in India, Tesla did not raise the topic of reducing import taxes on electric cars. The primary focus of the meeting was to discuss the upcoming visit of Indian Prime Minister Narendra Modi to the United States, where he is expected to have a meeting with Elon Musk, the visionary founder of Tesla. This visit is of great significance as Prime Minister Modi has been personally invited by President Joe Biden and First Lady Jill Biden, and they will also be hosting a state dinner in his honour.
It should be emphasized that the Indian government had previously turned down Tesla's proposal to lower import duties in order to encourage local manufacturing. Tesla had made it clear that it would only consider manufacturing its products in India if it was allowed to first sell and service its vehicles within the country. Despite accepting pre-bookings for its Model 3 in India back in 2016, with a reservation fee of $1,000, Tesla had to abandon its plans due to the exorbitant import duties imposed by India. Presently, India imposes a 100% import duty on fully imported cars valued above $40,000 (CIF value) and a 70% duty on those valued below that threshold.
Nitin Gadkari, the Minister of Road Transport and Highways in India, has expressed openness to Tesla setting up EV manufacturing operations in the country, provided that the company does not import cars from China. The future course of action depends on whether Tesla will present a revised proposal to the Indian government, outlining its plans for local manufacturing in India.
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