ANI
Months after signaling interest in the Indian market, Elon Musk's Tesla, appears poised to make its entry into the country. The central government is reportedly finalizing a policy aimed at extending concessional import duty, which might pave the way for Tesla's entry.
According to several media reports, Tesla's imminent entry into India is on the horizon as the government contemplates extending concessional import duty on electric cars exceeding ₹30 lakh ($36,000) for a period of 2-3 years. This strategic move is anticipated to spur employment opportunities and drive down the prices of electric vehicles (EVs) in the nation.
Moreover, the envisioned reduction in import duties may be contingent upon Tesla getting bank guarantees for establishing an EV manufacturing facility in India, as per reports.
Speculation was rife that the US electric carmaker would announce its debut in the Indian EV market during the Vibrant Gujarat 2024 summit. However, no definitive decisions had been reached regarding the establishment of an electric vehicle plant in the state by Musk until then.
Under the current policy framework, India imposes a 100 percent import duty on cars valued at over $40,000 (₹33 lakh) and a 60 percent import duty for cars valued below this threshold.
Tesla has communicated its intention to enter the Indian EV market and invest up to $2 billion in the country. Tesala asked the Centre to reduce the import duty to 15 percent for vehicles during the initial two years of operations.
In response, the government is contemplating the reduction of concessional import duties on imported cars, with policy finalization contingent upon the provision of bank guarantees. Notably, these bank guarantees can be enforced if the company fails to adhere to the stipulated timeline for investment commitments.
The prospective entry of Tesla has raised concerns among domestic EV manufacturers like Mahindra and Mahindra, Tata, and Ola Electric, who currently dominate the electric vehicle manufacturing landscape in India. These companies have advocated for a level playing field and have expressed apprehensions about potential market disruptions due to preferential treatment extended to Tesla and other international players.
Mahindra & Mahindra has engaged with government officials to underscore the imperative of a level playing field, advocating for an emphasis on domestic manufacturing. Ola CEO Bhavish Aggarwal has also cautioned against importing electric cars from foreign competitors, warning that incentivizing Tesla and other global entities could adversely impact sales for domestic players.
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