In a candid conversation, Nitin Gadkari, India’s Minister for Road Transport & Highways, made it abundantly clear: Tesla’s welcome in India, but there’s a catch. If Tesla manufactures locally in India, they’ll get concessions. But selling Chinese-made units here? No concessions, declared Gadkari, speaking to the Economic Times.

What Happened? Last week, buzz had it that to boost domestic production, the Central Government might slash import duties for companies like Tesla, but only if they commit to local manufacturing. The potential policy could see import duties on eco-friendly cars plummet from a whopping 100% to a mere 15%, provided these automakers kickstart their Indian manufacturing ventures and source components locally.

Earlier this year, there were murmurs about Indian officials’ reluctance to offer Tesla any duty cuts without a solid commitment to local investment. Despite Tesla’s plea for a 40% import duty, the current rates stand at 60% for electric cars priced below $40,000 and 100% for those above. Tesla’s argument? Treat their cars as electric vehicles, not luxury items.

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A hopeful situation for Tesla: India’s current customs policy doesn’t distinguish between electric and hydrocarbon-run cars, levying high duties to promote local production. Tesla’s initial attempt to penetrate the Indian market in 2021 hit a roadblock due to these steep import taxes. However, after a meeting between Elon Musk and Prime Minister Narendra Modi in June, hopes were reignited. Musk hinted at a “significant investment” in India, suggesting a brighter future for Tesla’s presence in the country.

After shelving its India entry plans last year due to the taxing import structure, 2023 saw Tesla rekindling discussions, hinting at setting up a manufacturing base on Indian soil.

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