India is among the top markets Tesla has been eyeing to expand its global electric vehicle footprint. However, the high vehicle import tax of 60% to 100% in the country continues to discourage the American EV giant.
Finally, the Indian government devised a smart proposal to make the situation a win-win for both parties. It previously confirmed plans to lower the current import tax on one condition: local production. However, it gained opposition from both the local and German industries, as reported by Teslarati.
India’s new policy proposal
Indian government officials announced they would develop a new electric vehicle policy that would include the import tax reduction, an apparent move to entice Tesla’s investment.
For context, India’s import tax for sub-$40,000 electric vehicles is currently at 60%. Meanwhile, models exceeding $40,000 are entwined with a 100% import tax.
With the new policy proposal, India aims to cut import taxes to as low as 15%. However, automakers must commit to establishing local production in the country within a specified period to qualify for the import tax reduction.
Opposition
The Times of India reported that the German government plans to submit a protest over India’s planned “pro-Tesla” policy.
The move is apparently due to Germany’s concerns that its automakers like BMW, Mercedes-Benz, and Volkswagen may be disadvantaged in a “one-sided effort to promote just one brand.”
Top sources reportedly disclosed that Germany has already started making a protest that it aims to send to its Indian counterparts, particularly the Department for Promotion of Industry and Internal Trade (DPIIT). For those unaware, DPIIT is currently leading the country’s efforts to secure Tesla’s investment.
“We are preparing our views on the matter, and are in touch with local officials of the German car companies in India, while also taking up the issue with the German Association of the Automotive Industry (VDA).”
Top sources told TOI
Clarification
Amid the opposition India received for its proposed policy revision, the government clarified that the new scheme will not focus on particular automakers. Instead, it will ensure the inclusion of all players in the entire automotive sector.
It further noted that the new policy will adhere to consultations with local and foreign electric automakers.
Despite these assurances, Germany remained dubious about the imminent import tax cuts for foreign-made vehicles from companies with plans to invest in a domestic production plant.
“Our companies were some of the early investors in India, bringing in massive funds, technology, and jobs here. It would be unfair to leave them out of any subsidized regime just because they will not make fresh investments like a new player such as Tesla… We need a level playing field and one that recognizes those companies, which have already invested here in green technologies.”
One of the sources told TOI
EV-a2z recently reported similar concerns of local automakers like Tata Motors over the Indian government’s plans to lower the current import taxes from 100% to 15%.
The prevailing fears of the German and Indian industries over the new policy that solely aims to attract new investments demonstrate Tesla’s dominance in the global electric vehicle space. The opposition seems to know that Tesla can easily disrupt the market once it arrives with its innovative technologies.
