Business / Govt may lower import duty on EVs if Tesla manufactures cars in India: Report

New Delhi: The Centre may consider reducing import duty and other incentives for Tesla if the US-based electric-car maker decided to manufacture its cars in the country. Last week, Tesla founder Elon Musk said that the company wants to launch electric vehicles (EVs) in India.

Replying to a question about the prospect of sales in India, Musk said on Twitter: “We want to do (launch EVs in India) so, but import duties are the highest in the world by far of any large country! Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India.”

Citing an unnamed official, ET reported that the government may take a fresh look, especially if the company will set up a manufacturing place in the country, emphasising that any order in regard will be sector-specific and not for a specific company.

It may be noted that the Narendra Modi-led government has committed support for the EV industry through various subsidies, and it has provided multiple sops to encourage the manufacturing of such automobiles in the country.

Discussions are underway with large multinational companies to set up productions units in India. The goods and services tax (GST) on EVs has been reduced to 5 per cent from 12 per cent while that on chargers and charging stations for electric cars has been cut to 5 per cent from 18 per cent.

Plus, under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (Fame) India scheme, incentives are given on the purchase of EVs through an upfront discount in their price. The government has also offered an additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase EVs. However, there is no relief for imported EVs.

Several news reports mentioned that Musk had sought a 40 per cent import duty on fully assembled electric cars against the existing range of 60 per cent—for cars priced below $40,000—to 100 per cent for those above $40,000. The carmaker has mentioned this issue in a letter to various government ministries and departments.

Earlier, Road Transport and Highways Minister Nitin Gadkari had said Tesla has a golden opportunity to set up its manufacturing facility in India given the country's push for electric mobility.