New Delhi, August 25 (Reuters) – India is working on a new electric vehicle policy that could slash import taxes for committed vehicle manufacturers for local production, following a proposal from tesla evs Inc (TSLA.O) as it considers entering the domestic market, sources with direct knowledge said.
According to two individuals, including a senior official with the Indian government, the proposal under discussion might allow automakers to import completely manufactured electric vehicles (EVs) created in India for as little as 15% tariff as opposed to the present 100% that applies to most of them and 70% for the remainder. For example, Tesla’s best-selling Model Y starts at $47,740 before tax credits in the United States.
“The Tesla proposal is agreeable and the government is showing interest,” said the familiar official.
Requests for comment from Tesla and the Indian trade ministry, which is working on the idea, went unanswered.
Finance Minister Nirmala Sitharaman said on being asked about the step that there is no proposal before me to reduce import duty on electric vehicles.
If adopted, the policy could significantly reduce the cost of imported EVs, potentially hurting local car makers who are investing to make electric cars at home. It could also open the door for Tesla and other global carmakers beyond to the world’s third-biggest car market where less than 2% of total car sales are EVs but are growing rapidly.
“This will be discussed quite extensively, as the government is keen on getting Tesla,” the official said, referring to the impact on local players.
The policy is still in its early stages of consideration and the final duty rate could change, said two of the sources.
Tesla’s new EV Other countries have made similar incentives to boost commitments for EV production. For instance, Indonesia has considered an offer to eliminate import duties by 50% for EV manufacturers planning investment, with the goal of attracting Chinese players and ev car tesla.
Tesla first tried to enter India by putting pressure on officials to cut import taxes on EVs by 100% in 2021. Last year, talks between Tesla and the Indian government failed when officials said the company would first have to commit to local manufacturing.
Recently, Tesla has told Indian officials that it is interested in setting up a local plant and is eager to make a new ev car tesla that costs about $24,000, almost 25% cheaper than its existing entry model for the Indian market and exports.
Tesla’s senior public policy and business development executive Rohan Patel recently held private meetings with top officials. Reuters reported that Prime Minister Narendra Modi, who spoke with CEO Elon Musk in June, was closely watching progress.
Indian officials have told Tesla that there will be no special incentive to enter the market and that Tesla’s proposal for manufacturing commitment with reduced import duties was put forward to keep both parties happy.
One source said that tesla electric vehicle told Indian officials that a potential plant in India could work at full capacity until 2030.
Outside the United States, Tesla currently has a plant in Shanghai – the world’s largest car factory – and one outside Berlin. It is building a new plant in Mexico that will focus on a new mass-market EV platform, Musk has said, which will lower costs for consumers.