Home ›› 10 Aug 2021 ›› World Biz
India is considering slashing import duties on electric cars to as low as 40 per cent, two senior government officials told Reuters, days after Tesla Inc's appeals for a cut polarised the country's auto industry.
For imported electric vehicles (EVs) with a value of less than $40,000 - including the car's cost, insurance and freight - the government is discussing slashing the tax rate to 40 per cent from 60 per cent presently, the officials told Reuters.
For EVs valued at more than $40,000, it is looking at cutting the rate to 60 per cent from 100 per cent, they said.
"We haven't firmed up the reduction in duties yet, but there are discussions that are ongoing," one of the officials said.
India is the world's fifth-largest car market with annual sales of about 3 million vehicles but the majority of cars sold are priced below $20,000. EVs make up a fraction of the total and luxury EV sales are negligible, according to industry estimates.
Tesla, in its pitch to the government - first reported by Reuters in July, argued that lowering import duties on EVs to 40 per cent would make them more affordable and boost sales. This triggered a rare public debate among automakers over whether such a move would contradict India's push to increase domestic manufacturing.
Even so, the government is in favour of a cut if it can see companies such as Tesla providing some benefit to the domestic economy - manufacture locally, for example, or give a firm timeline on when it would be able to, one of the officials said.
"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," the official said.
Tesla CEO Elon Musk said on Twitter last month that a local factory in India was "quite likely" if the company was successful with vehicle imports but taxes on them are high.
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.