The Indian government is apparently considering lowering import duties for electric cars. Tesla, among others, had publicly demanded lower tariffs, but so far had not been able to get through to the government.
This was reported by Reuters, citing two government representatives. According to the report, there could even be a “sharp” reduction in import duties. For electric cars with a value of less than $40,000 (cost of the vehicle, insurance and freight), the rate is to drop from the current 60 to 40 per cent. For vehicles costing more than $40,000 including the aforementioned costs, the rate is to drop to 60 per cent from 100 per cent currently, the sources said.
“We have not yet decided on the reduction of tariffs, but discussions are going on,” one of the government officials said. The report, however, did not say which department the sources belonged to or how consensual these plans were. A few days ago, the new energy minister had denied such a reduction in import duties demanded by Tesla.
India is the world’s fifth-largest car market with around three million vehicles per year. Electric cars currently have a very small share of the market, and the majority of vehicles sold in India cost less than 20,000 dollars, according to Reuters.
India had imposed high import duties on cars (not only electric ones) to boost domestic production. Tesla had set up a subsidiary in Bangalore earlier this year and plans to start selling in India this year – initially with imported models, as plans for a factory in India have not yet been implemented. Since the Model 3, including insurance and freight costs, is apparently worth more than $40,000 when it arrives in India, the retail price for the end customer would have doubled – by importing the vehicles from China, Tesla could possibly stay below this cost limit, but 60 per cent import duties would then still be due as things stand.
Tesla argued to the Indian government in July, according to Reuters, that lowering import duties on electric vehicles to 40 per cent would make them more affordable and boost sales – in line with India’s goals to increase the market share of electric cars. Prime Minister Narendra Modi, however, had launched the ‘Make in India’ campaign to increase local value addition when he took office. “Reducing import duties is not a problem as not many EVs are imported in the country,” said one of the sources. “But we need some economic gain out of that. We also have to balance the concerns of the domestic players.”
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