comscore Tesla should make cars, electric vehicles in India to enjoy tax benefits: Niti Ayog

Tesla should make EVs in India to seek tax benefits: Niti Aayog suggests

Niti Aayog has suggested Tesla to not bring in CBUs, and instead set up a manufacturing plant in India to avail all benefits on EVs offered by the Centre.

Tesla Pixabay

(Image: Pixabay)

Tesla had reportedly moved to PM Narendra Modi’s office for reduced import taxes on Electric Vehicles (EVs). Now, Niti Aayog has urged the company to make in India to seek the tax benefits on EVs that the Centre offers. The request was made by Rajiv Kumar, Vice Chairman of Niti Aayog while speaking at a conference. Also Read - Nissan to invest whopping $18 billion in EV development in next five years

Kumar has requested Tesla to not follow the Complete Built Up (CBU) format, where it will import completely built units of the cars to India. He has rather suggested the company set up a facility and create job opportunities, while at the same time strengthening the EV infrastructure of the country. Also Read - Would you buy a Xiaomi electric vehicle? Company plans to produce lakhs of cars every year

“Come and manufacture in India, you will get all the tax benefits you want. The argument that we will create a market by exporting into India finished products… is an old argument and we have moved on from that,” Kumar said during the conference. Also Read - BMW iX all-electric SUV to launch in India on December 11: Could cost north of Rs 1 crore

Currently, import duty on CBUs in India is between 60-100 percent, then there is the GST, which comes in at 40-50 percent, and then comes the registration taxes, which amount between 10-20 percent. This is too expensive, and amounts to over 45 percent of a CBU car’s price to go to the government as taxes.

Tesla requesting the Indian government to reduce import taxes on EVs

According to recent reports, Tesla executives met PM’s officials in September in a closed-door meeting to discuss the exorbitantly high taxes. The company has been lobbying in India to try and reduce import duties on electric cars.

The company looks to have to Indian government standardise the taxes on electric cars to 40 percent irrespective of the customs value. It also wants the government to withdraw the social welfare surcharge of 10 percent on electric cars. If the taxes are reduced, it will make EVs more affordable and boost sales.

According to a report by Reuters, the Indian government is looking to slash the tax rate to 40 percent from 60 percent on imported electric vehicles worth less than $40,000 (including vehicle cost, insurance and freight). For EVs priced over $40,000, the government could cut the tax rate from 100 percent to 60 percent.

Tesla’s demands for slashing import duties in India has been supported by other car manufacturers like Mercedes and Hyundai. However, Indian manufacturers like Tata Motors and Ola Electric are opposed to the idea.

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  • Published Date: October 22, 2021 2:07 PM IST

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