Disappointment for Tesla as Indian govt rejects proposals for EV import subsidies

Tesla in India: In a significant setback for Tesla, the Indian government has firmly stated that there are no plans to provide subsidies for the import of electric vehicles (EVs) into the country. This announcement poses a considerable challenge to Tesla's ambitions of making inroads into the Indian market.

Parliament Clarification

Minister of State for Commerce and Industry, Som Parkash, addressed the matter in Parliament, asserting that there is no proposal to exempt local value addition costs or provide subsidies on the import duty for electric vehicles.

No Subsidy on EV Import Duties

Parkash's written response highlighted the government's focus on creating a robust ecosystem for industrialisation and domestic value addition, emphasising policies like Goods and Services Tax, corporate tax reduction, ease of doing business improvements, and measures to boost manufacturing.

He specifically mentioned, "Presently, there is no proposal either to provide an exemption from local value addition cost or to provide a subsidy on the import duty on electric vehicles in India."

Government Initiatives

While the government has launched schemes like the Production Linked Incentive (PLI) Scheme for the automobile industry, aiming to boost domestic manufacturing of advanced automotive technologies, it has not budged on the issue of subsidies for EV import duties.

Tesla's Dilemma

This stance poses a dilemma for Tesla, which has been keen to enter the Indian market. Tesla representatives have engaged in discussions with government officials, but a consensus on mutually agreeable terms is yet to be reached.

Local Manufacturing vs Import Taxes

While the government advocates for local manufacturing, Tesla has sought lower import taxes initially to compete in the Indian market. Despite Tesla CEO Elon Musk expressing willingness for a "significant investment" in India during Prime Minister Narendra Modi's US visit, the negotiations have hit an impasse.

Potential Delays

The government's firm stance on EV import duties could lead to further delays in Tesla's entry into the Indian market. This development follows recent talks between the government and Tesla, which were on the brink of an agreement allowing the US automaker to start car sales in India from next year and establish a factory within two years.