Union Finance Minister Nirmala Sitharaman has dismissed recent reports suggesting that the Indian government is considering a reduction in import taxes on electric vehicles (EVs) for automobile manufacturers, especially those partnering with local manufacturing units. The clarification comes in response to a Reuters report that claimed the government might lower import duties from the current 100% rate to as low as 15% for higher-priced EVs and 70% for others.
Sitharaman addressed the matter while speaking to reporters on the sidelines of the B20 summit, stating, “No proposal is before me to lower import duty on electric vehicles.”
The Reuters report had speculated that such a reduction in import duty could benefit companies like Tesla, which have shown interest in entering the Indian market. Tesla had previously proposed establishing a car factory in India and engaged in discussions about potential market entry. Elon Musk, the founder of Tesla, had expressed concerns about the high tariff rates in India.
However, Tesla’s efforts to enter the Indian market faced challenges due to the Indian authorities’ insistence on a commitment to local manufacturing as a prerequisite for favorable arrangements. The requirement for local manufacturing was a crucial factor in the negotiations between Tesla and Indian authorities, which did not materialize in a firm agreement.
The Finance Minister’s clarification has dampened the hopes of manufacturers who were optimistic following the Reuters report. The impact of this decision on Tesla’s plans to set up a car factory in India remains uncertain. It remains to be seen whether Tesla will continue to pursue its goal of establishing local manufacturing in the country despite the apparent decision to maintain the existing import tax rates for EVs.
