The government may consider offering Tesla tax breaks as the US-based electric vehicle (EV) maker plans to begin sales in India.
However, there are two conditions Elon Musk’s Tesla must meet in order for the government to consider lowering the import tax on models of cars with built-in units (CBU): reports Bloomberg News.
The government has asked Tesla to step up local sourcing and share detailed manufacturing plans, said a person quoted in the report. On the basis of this information, the government would consider cutting taxes on imported Tesla electric vehicles.
The Department of Heavy Industry and Public Enterprises asked Tesla for the above details in a meeting earlier this month. The ministry also asked Tesla for its opinion on the import of fully built cars versus partially built vehicles (disassembled units), which incur lower import duties.
Tesla’s plan to start selling electric vehicles in India ran into a roadblock earlier this year due to high taxes on imported vehicles. The current import duty is 60 percent for EVs under $ 40,000 and 100 percent for anything above.
The manufacturer of electric vehicles wrote to the government in July calling for the import tariff to be reduced from the current 60 to 100 percent to 40 percent. The company reportedly called for the elimination of the 10 percent welfare charge that is levied on all imported cars.
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At the meeting earlier this month, Tesla told the government that it has so far sourced $ 100 million worth of components from India and is suggesting the volume will increase after tax breaks. This has been confirmed by a person quoted in the Bloomberg report.
In addition to increasing local procurement, Tesla has also agreed to make significant investments in sales, service and charging infrastructure and to evaluate more extensive investments in manufacturing after entering the Indian market.
While the government appears to be reassessing its plans to consider concessions for Tesla, it said earlier this month that there were no plans for it Reduction of import duties specifically for Tesla’s vehicles.
Tesla could face a major pricing problem in India if the government doesn’t consider cutting import tariffs as the prices of its electric vehicle models are already high. The company is also facing several challenges in the Indian auto market, where less than 1 percent of electric vehicles are sold.
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