Government Denies Tesla Incentives for Entering Indian Market

In recent weeks, there had been widespread expectations that Tesla would receive import duty concessions for its entry into the Indian market, contingent on its commitment to local manufacturing. However, this appears not to be the case. Tesla had requested a reduction in import duty from 100 percent to just 40 percent, aiming to distinguish itself from luxury car brands. According to the Times of India, the central government has stated that it is not considering any proposal to offer duty concessions linked to local value addition for the import of electric vehicles (EVs) into the country.

Som Parkash, Minister of State for Commerce and Industry, noted that a production-linked incentive (PLI) scheme with a budgetary outlay of ₹25,938 crore has been announced for the automobile and auto component industry. He further clarified that there is no proposal for exemption or subsidy on EV imports in India.

The government has approved the PLI scheme for advanced chemistry cells for batteries, with a budget of ₹18,100 crore. This move aims to encourage the creation of battery gigafactories similar to those Tesla operates in the US, Germany, and China.

It was reported that Tesla had committed to investing up to $2 billion in a manufacturing facility in India for its forthcoming sub-$30,000 electric car, which Elon Musk announced in 2023 as part of his extended master plan. Musk also met with Prime Minister Modi during his 2023 visit to the US and had fruitful discussions, but these did not result in any concrete outcomes.

Tesla’s executives were also in India to help facilitate this deal and they were in talks with Nivruti Rai, the former Intel India Vice President and India head who is now leading InvestIndia.