Import Duty Cut
Tesla cars are most likely to come under the 100 percent import duty bracket

Import duty cut cannot be given to a company based on an intent to invest, the government has said

The Indian government has once again made it clear that an import duty cut will not be granted for Tesla’s electric vehicles (EVs).

According to a recent development, the Ministry of Heavy Industries has stated that “offering duty concessions when someone will consider investing after 2-3 years will be a reversal of a policy we have followed for several years.”

The source from the ministry has also stated that lower tariffs cannot be given to Tesla cars alone, adding that such a move will be unfair to existing players who have set up shop here.

Back in July, Tesla boss Elon Musk had stated through a post on microblogging site Twitter that India has very high import duties and that he is hopeful that at least a temporary tariff relief will be provided to EVs.

But the government has been clear in its stance and is pushing the ‘Make in India’ initiative with full might. This has led to new EV companies, including Ola Electric, building full-scale manufacturing facilities in India.

2021 Tesla Model 3 Interior
Local assembly of cars will also create job opportunities in India

Tesla has been told that it should consider importing semi-knocked down (SKD) kits into India and locally assemble them to attract lower duties.

Import tax on SKD kits is between 25 and 30 percent, which is much less than the 60-100 percent import duty that is applicable for completely built-up units (CBUs).

The government wants Tesla to begin its India operations with local assembly of EVs, followed by a full-fledged manufacturing operation.

Tesla, on the other hand, has told the government that it is sourcing components from India for its global supply chain and proposes to scale it up.