“Still working through a lot of challenges with the government”, said Elon Musk on microblogging platform Twitter in response to a tweet querying about Tesla’s launch in India.
Billionaire Elon Musk is the founder and CEO of electric-car maker Tesla Inc. Musk is all set to build a Tesla factory in India if the government reduces the cost of importing electric vehicles.
According to Musk, the duties imposed by India are the highest among large countries. Tesla is trying to bring down the price of cars, but it would not be possible due to high import duties.
Commencement of New Factories
At Tesla’s annual meeting in Texas, the US, talking to stakeholders, said that future factory locations would commence in 2022, and the final decision would come up in 2023. India, the fifth-largest automotive market in the world, has offered a red carpet welcome to electric-car maker giant.
Red Flag to set up Manufacturing Plants
Transport is one of the fastest-growing sectors in India despite the recent crisis. This demand for a sustainable solution to reduce dependency on imported crude oil and cut down on air pollution.
India has been keen to increase the fleet of electric vehicles, but its efforts went in vain due to a lack of investment in manufacturing and infrastructure like charging stations. It has planned an investment of $4.6 billion to companies setting up manufacturing plants and charging infrastructure.
Minister for Road Transport and Highways Nitin Gadkari said that Tesla has a golden opportunity to set up an electric vehicle factory in India rather than importing vehicles from China.
He further added that the government of India would provide whatever is needed, and Indian vendors are capable of supplying all raw materials to Tesla.
Tesla India Motors and Energy
Tesla Inc. has decided to set up an electric car manufacturing unit in Karnataka, Bengaluru. It registered a company in India, Tesla India Motors and Energy, with an authorized capital of 15 lakhs.
The company cleared the homologation stage for all four models. Homologation is the process that certifies a particular vehicle is roadworthy and matches certain criteria laid out by the government.
Lowering of import duties
India currently imposes 100% import duty on cars with CIF (Cost, Insurance and Freight) value of $40,000 and 60% on cheaper vehicles.
The world’s most valuable car maker Tesla has pitched for a cut in import duties as it plans to finalize its product launch in India. It has sought 40% import duty on fully assembled electric cars.
Response to Tesla’s demand
The government said that India is a very large and mature market, a hub of trade for centuries, and the country is open to discussing a temporary cut in import duties, maybe for a period of three years. Still, Tesla first has to make some commitment and present a firm business plan.
A concession in import duties will boost the import of electric cars rather than export. This will lead to unemployment in India, impacting the country’s economy.
Read More: How the Rise of Electric Vehicles will change the Automotive Industry?
