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The government stated that it is not presently thinking about lowering taxes on imported electric cars, a move that may cause Tesla Inc.'s market entry strategy to be delayed. The junior minister of the Ministry of Commerce and Industry, Som Parkash, informed the house late on Wednesday that "at this time, there is no proposal either to provide an exemption from local value addition costs or to provide a subsidy on the import duty on electric vehicles in India."
The government stated that it is not presently thinking about lowering taxes on imported electric cars, a move that may cause Tesla Inc.’s market entry strategy to be delayed. The junior minister of the Ministry of Commerce and Industry, Som Parkash, informed the house late on Wednesday that “at this time, there is no proposal either to provide an exemption from local value addition costs or to provide a subsidy on the import duty on electric vehicles in India.” According to Mr. Parkash, the government’s “Make-in-India” initiative includes laws that are currently in place with the goal of luring both global and domestic capital into the electric vehicle sector. In order to increase domestic EV production, the government introduced a $3.1 billion incentive scheme in 2021. Furthermore, as part of a $2 billion initiative, it is providing incentives to businesses that wish to assemble batteries in India.
The government’s announcement is a surprising turn of events, given that Bloomberg News revealed last month that the government was developing a program that would have permitted foreign companies to import electric cars at reduced tax rates provided they committed to eventually manufacture in India. Tesla and India’s negotiations may come to a standstill once more. Elon Musk, the CEO of Tesla, had previously demanded lower taxes in order to sell cars made overseas at competitive costs, while Prime Minister Narendra Modi’s government was pressuring the US manufacturer to manufacture cars domestically. This deadlock lasted for a full year. Even though communication between them has since resumed, and Musk even predicted that Tesla would probably make a “significant investment” in the South Asian country during PM Modi’s visit to the US in June, those plans may now be postponed. According to a Bloomberg story last month, India and Tesla were nearing a deal that would see the US automaker’s vehicles sold there starting next year and the establishment of a facility in two years. During a visit to Tesla’s Fremont, California, plant last month, Trade Minister Piyush Goyal revealed that the company intends to nearly quadruple its procurement of auto parts from India to $1.9 billion this year.
