Tata Motors lobbies India not to lower import taxes on electric vehicles as Elon Musk's Tesla looms: Report

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Tata Motors is pressing Indian officials not to lower import taxes of 100% on electric vehicles and to protect domestic industry and its investors, as the government reviews Tesla's plans to enter the market, people with direct knowledge said. As India tries to boost domestic manufacturing and electric vehicle (EV) adoption, Tesla is proposing to set up an Indian factory but is demanding lower import taxes for electric cars.

India is working on a new policy to cut import taxes on EVs to as low as 15% for companies committing to some local manufacturing. The policy could allow Tesla to set up its India factory to make its proposed $24,000 car while importing its more expensive models with lower taxes.

Tesla's strategy is a departure from its failed plan last year when it just pushed India to lower duties. In meetings with Prime Minister Narendra Modi's office and other departments, Tata has opposed the plan, arguing that its investors made decisions assuming the tax regime favouring locals will remain unchanged, two sources with knowledge of talks said.

Tata and Modi's office did not respond to requests for comment. Tata is also arguing that India's EV players need more government support in the early growth stage of the industry, pointing to imported gasoline or diesel cars which are still taxed at up to 100% despite the industry being well developed, said the first source.

"Lower duties will hit the entire (domestic) industry," the person said, adding "The investment climate will get vitiated." Tata, one of India's biggest carmakers, started its EV business in 2019. Private equity firm TPG and Abu Dhabi state holding company ADQ invested $1 billion in 2021, valuing the EV business at around $9 billion, and the second