India remains undecided about reducing import taxes on electric vehicles (EVs), a move critical for easing Tesla’s market entry but causing concern among domestic automakers. The proposed policy could slash the current 100% EV import tax to as low as 15% for carmakers committing to future local production.

What Happened? The discussions gained momentum following Tesla’s interest in establishing a factory in India for an EV priced at $24,000, significantly lower than its current base model. Tesla’s ambition extends to selling more expensive models in India, as reported by Reuters.

Rajesh Kumar Singh, a senior official at India’s Department for Promotion of Industry and Internal Trade (DPIIT), highlighted at the World Economic Forum meeting in Davos that Tesla is targeting cars in the $24,000 to $36,000 range, eyeing volume sales in this segment.

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However, this initiative faces resistance from Indian EV players like Tata Motors and Mahindra & Mahindra, which are advocating for measures to protect local firms. Mahindra Managing Director Anish Shah has called for a level playing field, emphasising the importance of promoting local manufacturing.

India’s EV Market Growth: Tesla, initially demanding lower import taxes, has indicated a willingness to set up local manufacturing, aligning with India’s push for domestic production. However, firm commitments to invest and produce in India are expected from Tesla.

India witnessed sales of 4 million cars last year, with EVs accounting for 82,000 units but displaying a remarkable 115% growth compared to the previous year. The government is also focusing on developing adequate charging infrastructure to encourage the shift to EVs, addressing consumer hesitation due to the current lack of facilities.

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