Tesla negotiates exemption of import duties with government to launch in India

Tesla CEO Elon Musk also hints at setting up a factory in India.


After months and months of back and forth, Tesla has finally made a move towards bringing its long awaited electric cars to India. In a prodding query on Tesla’s debut in India, a Twitter user who goes by the handle @jasveer10 tweeted the company CEO Elon Musk, who soon replied with an answer we have all been waiting to hear. Musk said that the company is in discussion with the Indian government for its debut, and it is negotiating “import penalties/restrictions” until a local factory is built.

The reason why these negotiations are essential for Tesla is to manage to bring down its products to a competitive price in India. And an exemption from the import duty is the easiest way to do that. Right now, international auto brands and companies that important a fully built unit of their product to India, need to pay 100 percent to 120 percent import duty, which increases naturally increases the cost of the vehicle dramatically. Not to miss, Elon Musk’s tweet also hints that this negotiation is being done for only till Tesla sets up a local factory in India.

As interesting as this development is, it is also surprising, considering just two months ago, in a similar query by another Twitter user, Musk had declined Tesla’s debut in India in 2017 or 2018, blaming the mandatory 30 percent local sourcing norm. ALSO READ: Elon Musk hints at delay in Tesla’s entry in India; local sourcing norms to be blamed

However, this does come as a relief to the Indian government, which has been trying to propose a ‘Make in India’ project to the company. Reportedly, the government had proposed to offer a land near a major port to facilitate exports to Tesla, along with offer other incentives. Sometime last year, event Transport Minister Nitin Gadkari visited Tesla, where he proposed a joint venture between the company and Indian automobile companies to manufacture pollution-free vehicles, especially in commercial and public transport.

The Indian government is naturally being pushy about the proposal considering its ambitious plan of making India a 100 percent electric vehicle nation by 2030. Presently, the automotive industry in the country is worth $74 billion, and at this current rate, the industry is poised to become the third-largest auto market by the end of the current fiscal. Besides, the government wants to see 6 million electric and hybrid vehicles on the roads by 2020 under the National Electric Mobility Mission Plan (NEMMP) 2020 and Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME). ALSO READ: Elon Musk’s Tesla remains apathetic towards India’s push for ‘Make in India’

The tweet was spotted by FactorDaily. 

  • Published Date: June 15, 2017 11:07 AM IST