Tesla's Push for Lower Import Duties Sparks Controversy Among Indian Cos

Published on 19 Nov, 2023, 4:01 PM IST
Updated on 19 Nov, 2023, 4:01 PM IST

Pratik Rakshit
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Tesla Model 3 (Used for representation).

The Elon Musk-led company has shown interest in establishing a manufacturing base in India.

In a recent development, discussions on potentially lowering import duties for high-end electric vehicle giants, including Tesla, are causing a stir in the Indian automobile sector. Notable players like Mahindra & Mahindra, Tata Motors, Maruti Suzuki, and Hyundai are expressing unease over the proposed policy changes. According to government officials, the policy is still under consideration, with various options on the table. No decision has been reached, and consultations with auto companies are ongoing. One option being explored is a temporary reduction in import duties, though the final policy is expected to take time to evolve.

Tata Motors Logo

Tesla, a long-time advocate for reduced import duties, is back in the spotlight. The Elon Musk-led company has shown interest in establishing a manufacturing base, potentially introducing a more affordable variant tailored for the Indian and export markets.

However, opposition to import duty relaxations is evident, particularly from companies like Tata Motors and Mahindra & Mahindra. They argue that a duty cut now contradicts previous government commitments to reward those who invested early and locally. These companies, already with vehicles on the road, are also part of the Production-Linked Incentive (PLI) commitments.

Japanese players, yet to enter the electric segment, express concerns about the future of their hybrids. They rely on these until their electric vehicles hit Indian roads.

The Society of Indian Automobile Manufacturers (SIAM) is in discussions with various companies and aims to formalize its stance, aligning with the demands of the domestic industry. Their focus is on opposing significant relaxations on import duty.

German automakers like BMW, Mercedes-Benz, and the Volkswagen Group are adopting a wait-and-watch approach. They seek a 'level playing field' before making any decisive moves in response to potential import duty changes.

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Import Tax
Tax On EVs