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4 Feb, 2022 16:57

Government shoots down Tesla’s call for tax breaks

India has turned down Tesla’s request to lower import taxes on electric cars, encouraging Elon Musk’s company to produce locally instead
Government shoots down Tesla’s call for tax breaks

New Delhi has refused to provide the US-based electric car maker Tesla with tax breaks, the chairman of India’s Central Board of Indirect Taxes and Customs, Vivek Johri, confirmed in an interview on Thursday.

“We looked at whether the duties need to be rejigged, but some domestic production is happening and some investments have come in with the current tariff structure,” Johri stated.

India levies extremely high import duties on complete vehicles, ranging from 60 to 100% depending on a car’s characteristics and price. The threshold for imposing the maximum possible tax is set at $40,000, which effectively makes all the electric cars produced by Tesla fall under that category. The existing tariffs structure has not deterred other companies from importing, so no exceptions will be made, Johri pointed out.

“Some investment has already come in with the current tariff structure. So why can’t others also come in?” the official stated. “There are other foreign brands also that are being sold in the country with the current tariff structure.”

While Tesla announced its intent to enter India’s market as early as 2019, the electric car giant has still not been able to do so. The Indian government has been encouraging the company to establish local production, pointing out that importing partially-built cars and assembling them locally would mean significantly lower levies. The car maker urged New Delhi to reduce the tariff rates on high-end cars to 40% instead, branding the standing rules “prohibitive” for the import of pricey vehicles.

Asked on Twitter in mid-January when Tesla cars would be available in India, the company’s CEO Elon Musk said he has been “still working through a lot of challenges with the government” to make the possible launch happen.