Indian government may lower import tax for Tesla electric cars in India; here are the details

Updated on Aug 14, 2021 09:43 AM IST  |  116.2K
Tesla, Elon Musk
Indian government may lower import tax for Tesla electric cars in India; here are the details

A couple of weeks ago, Elon Musk said that Tesla wants to launch its electric vehicles in India as soon as possible, however, the country’s import duties on EVs are way too high. In addition, the electric car maker also sent a letter to the ministries and the think-tank Niti Aayog. In the letter, it asked the government to reduce import duties on electric vehicles. Soon after, the union minister Krishan Pal Gurjar said that the government has no plans to reduce the import duties. However, the government is now reportedly considering reducing the duties.

The government has asked Tesla to ramp up local procurement

According to a report by Bloomberg, the Indian government is reevaluating its plans to consider import tax concessions for Tesla in the country. The source suggests that the government has put two conditions for Elon Musk’s Tesla to get the tax concession. The first condition for Tesla is to ramp up its procurement of components from India. In addition, the EV maker has to share complete details of its manufacturing plans in India. The details were shared to the publication by a person familiar with the government’s plans, who wished not to be named as the discussions were private.

These details were sought from Tesla earlier this month by the Ministry of Heavy Industries and Public Enterprises. Apart from the aforementioned conditions, the ministries have also asked Tesla regarding its views on importing fully built vehicles instead of partially built vehicles, which have lower import duty.


Tesla had sought to reduce import duties on EVs to 40 percent

Earlier in July, Tesla wrote a letter to the ministries, asking for a reduction in import duty on electric vehicles to 40 percent from the current 60 to 100 percent regulation. The company had mentioned that this move will increase demand for electric vehicles in the country, apart from generating revenue for the government. However, the request was reportedly denied earlier.

Currently, India’s current import tax on fully imported cars is 100 percent for all cars priced above $40,000. The same is 60 percent for cars that cost less. Notably, the most affordable car from Elon Musk’s Tesla is the Model 3, which costs close to $40,000 for the base model.


That’s said, Tesla is planning to launch its cars in India later this year or early next year. If the government reduces import duty, then the launch could happen sooner. Notably, the company’s Model 3 is already on the Indian roads for testing purposes. 


Which is the most affordable Tesla car at the moment?
The Tesla Model 3 model is the most affordable electric vehicle from the brand at the moment. The standard variant of the EV costs $39,990, while the long-range and performance models are priced at $48,990 and $56,990 respectively.

How many cars Tesla is offering?
Tesla commenced its operations in 2008 and started manufacturing its first car called the Roadster the same year. Now, the brand is offering the Tesla Model S, Model X, Model Y, and Model 3 on sale at the moment.

When is Tesla launching its cars in India?
Tesla is expected to launch its first car in India in the coming months, possibly in the first half of 2022. The brand has already setup its first office in the country in Bengaluru.