Kiss'n'Tesla, let the EV romance begin

economictimes.indiatimes.com:

GoI has done well to proactively fast-track approvals for Tesla. The arrival of an iconic brand has considerable positive signalling power for India, which is seeking to position itself as a preferred FDI destination. Hopefully, the Elon Musk-owned company's journey will follow the same road as Apple.

Late last week, Apple CEO Tim Cook said that the company's India revenues had doubled in the September quarter. By end-2023, India would account for 10% of iPhone production, compared to 5-7% in 2022. Remarkably, by 2025, India could account for 25% of global shipments, as per JPMorgan.

Apple's growing presence in the Indian market has already had a multiplier effect in terms of positive perception for the world's fifth-largest economy.

While good for India, Tesla has ample incentive to enter the world's third-largest car market after the US and China. The share of EVs is minuscule — 0.77% of the 4.37 million units sold in 2022, compared to almost 20% in China. So, there's ample scope for Tesla to grow.

The sticking point has been Tesla's demand that import duties on fully assembled EVs should be cut to 40%. This is currently 60% on cars priced below $40,000, and 100% for cars above that. These duties don't distinguish between EVs and fossil-fuel cars.

One solution reportedly being considered is to reduce duties to 40% for electric cars. That's suboptimal in terms of economic theory, but pretty par for the course in these days of resurgent industrial policy. Also, in the initial years, GoI will have to be liberal in allowing imports from Tesla's parts suppliers in China.