India Mulls Import Tax Cuts on EVs After Tesla Lobbying

Published August 10th, 2021 - 12:00 GMT
India Mulls Import Tax Cuts on EVs After Tesla Lobbying
The officials told Reuters that the Indian government is discussing reducing the tax rate of imported EVs with a value of less than $40,000 from 60% to 40%. While it is considering to slash the tax rate of imported EVs valued at more than $40,000 to 60% from 100%. (Shutterstock)

India is mulling cutting import duties on electric vehicles (EVs) to as low as 40%, two senior government officials informed Reuters, days after Tesla Inc's appeals for a cut polarised India's automobile industry.

The officials told Reuters that the Indian government is discussing reducing the tax rate of imported EVs with a value of less than $40,000 from 60% to 40%. While it is considering to slash the tax rate of imported EVs valued at more than $40,000 to 60% from 100%.

In July, Reuters reported that Tesla's pitch to the Indian government highlighted that lowering import duties on EVs to 40% would make them more affordable and increase sales. This resulted in a rare public debate among Indian automakers over whether such a decision would contradict India's push to boost domestic manufacturing.

“Reducing import duties is not a problem as not many EVs are imported in the country. But we need some economic gain out of that. We also have to balance the concerns of the domestic players,” one of the officials stated.

The second official said that since the duty cut is being considered only for EVs and not other categories of imported cars, it should not be a concern for domestic automakers -- that mainly manufacture affordable gasoline-powered cars.

He also mentioned that India’s finance and commerce ministries, as well as its federal think tank Niti Aayog, chaired by Prime Minister Narendra Modi, are discussing the proposal and all stakeholders will be consulted.

Both officials did not want to be identified as the discussions are still private, and India’s commerce and finance ministries as well as Niti Aayog did not provide any comment yet.

Opposing the proposed cut are the Indian auto giants Tata Motors and Softbank Group-backed Ola.


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