Prime Minister Narendra Modi is pushing for electric vehicles to become the new standard in India. Therefore, it is only natural for Tesla to get attracted to India and its upcoming EV market – which promises to be among the largest in the world a few years down the line. Thus, Tesla had urged India to lower import duties for some time. Given Elon Musk’s love affair with China, India probably will not consider the company’s proposal for a duty cut in India.
No ‘Duty Cut’ for Tesla
Though the government is yet to take a decision on electric vehicle pioneer Tesla’s proposal for a duty cut in India, it is likely to deny the same. However, the proposal is currently under evaluation, as per NITI Aayog CEO Amitabh Kant.
Kant told, “All concerned ministries are studying the proposal and a final decision will be taken by the Ministry of Finance’s revenue department.”
The government wants Tesla to set up manufacturing units and produce electric vehicles in India only, instead of selling the China-manufactured cars in the Indian domestic market.
Reportedly, the government may temporarily reduce import duties tentatively for three years but only if the company has some “firm” business plans. The tax break from the government requires some commitment from Tesla with respect to its manufacturing plans. A report quoted, “Tesla already sources some components then why not manufacture it here. Concessions cannot be given for testing the market.”
The government is indecisive that an outright concession in duty might affect the establishment of manufacturing units in India and can result in increased imports of EVs.
Earlier as reported by TFI, Nitin Gadkari had also asked Elon Musk to start producing electric vehicles in India, instead of selling China-manufactured cars in the Indian domestic market. Assuring Tesla of all necessary support, the minister also asked Musk to export made-in-India Tesla cars.
Musk’s love-affair with China
After setting up its factory in Shanghai in 2019, Tesla has currently ramped up its production facilities to produce more than 2,50,000 cars per year. In 2020, the Chinese market accounted for 21 per cent of Tesla’s vehicle sales revenue, second after the United States. Elon Musk even donated 5 million Yuan to the Chinese Center for Disease Control and Prevention to help them in fighting Covid-19.
Read more: Tesla can sell cars in India only if it manufactures cars in India, NitinGadkari makes it clear
Musk turned to India as China entered an energy crisis
After the factories, entire industries, small businesses were told to stop consuming electricity, Tesla suppliers had suspended production at some Chinese factories for a number of days to comply with tighter energy consumption policies. In the aftermath, Tesla announced a big-bang entry into the country and Musk wanted his electric cars to run on the domestic roads (despite import duty concerns). According to Soumen Mandal, a research analyst quoted by IANS, India is believed to become one of the largest EV markets soon and Tesla is aware of the same.
Indian Government has time and again drawn a clear distinctive line between doing business in India and catering to China’s interests. Now, with its decision to deny a duty cut for Tesla, the former has made it evident that if Tesla wants to be benefitted from the Indian consumer base, it will have to stay true to an ethical line drawn by the Government.