India considers reducing import tax on EV post Tesla's investment proposal: Report

livemint.com:

Tesla made an investment proposal to set up a car factory in India, a way to enter the domestic market. According to an exclusive report by Reuters, the import tax could be reduced to as low as 15% as opposed to the current 100% for cars that cost above ₹33 Lakhs and 70% for the rest. The Reuters report citing people familiar with the development noted that the move if implemented could allow electric vehicle makers to import fully-built EVs into India with just 15% import tax to be paid to the Indian Government.

"There is an understanding with Tesla's proposal and government is showing interest," the Reuters report cited the official familiar with the development. If India Government implements the reduction in import tax this would inevitably also bring down the cost of imported electric vehicles in the domestic market. Notably, local carmakers have been avoiding delving much into the EV variant manufacturing.

However, with more and more companies entering the Indian market with their EVs, it would force a drastic change in the Indian automobile sector. The reduction in import tax would also encourage global automakers, beyond Tesla, to tap the world's third-largest car market where sales of EVs are less than 2% of total car sales, but growing rapidly. The lower import taxes could help Tesla sell its full range of models in India, and not just the new car it wants to make locally, Reuters cited another official.

After much speculation and deliberation, Elon Musk had visited India to discuss a Tesla insertion in the domestic car market. Tesla first tried to enter India in 2021 by pushing officials to lower the 100% import tax for EVs. Last year Musk and India's probable deal did not go through as the latter pushed for a