Tesla’s request for tax breaks for imported electric vehicles in India was recently met with a stern rejection, with Vivek Johri, chairman of the Central Board of Indirect Taxes and Customs, noting on Thursday that other companies are adapting to the country’s current rules without any issues.
Johri noted that India’s rules already allow automakers to bring in partially-built vehicles so that they can assemble them locally. Such a system would enable a carmaker such as Tesla to avoid India’s steep import taxes, which could go as high as 100%.
“We looked at whether the duties need to be re-jigged, but some domestic production is happening, and some investments have come in with the current tariff structure. So, it is clear that this is not a hindrance,” Johri said.
The official urged Tesla to follow the examples set forth by local companies such as Mahindra & Mahindra Ltd. and Tata Motors Ltd., both of which are looking to build local capacity for electric vehicles. Mercedes-Benz, another foreign automaker, is also expected to roll out a locally-assembled version of its EQS luxury sedan later this year.
“There are others importing completely built units. That route is open… Some investment has already come in with the current tariff structure. So why can’t others also come in? There are other foreign brands also which are being sold in the country with the current tariff structure,” Johri noted.
While Tesla is yet to formally enter India, officials from at least five states have already expressed their interest in hosting Tesla, even after Musk mentioned last month that the company was still facing challenges with the government. India, for its part, has been pretty consistent in the idea that Tesla should look into assembling its cars locally instead. An Indian minister asked Tesla back in October to avoid selling its Made-in-China vehicles in the country as well.
Despite the challenges Tesla is facing in India, some progress has been made in the company’s efforts to enter the country. In 2021, Tesla received homologation certificates for seven of its car models, three of which were granted in December. Supercharger V2 stalls have also been delivered to the country in late 2021, suggesting that Tesla is really putting in the effort to start selling its cars in India.
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