Tesla asks Indian govt to lower import duty on electric cars: Ola’s Bhavish Agarwal & Tata disagree

The electric automobile giant Tesla is preparing to launch its first car in the Indian market officially. Elon Musk, chief of Tesla is working to reduce the import duties on electric cars as per reports. Musk recently said that the delay in the launch of the Tesla cars in India is due to the extremely high import duties. The duties are there in place to give a boost to the local manufacturing.

Tesla wrote to the Indian govt ministers seeking a big reduction in import duties on electric vehicles, according to sources of Reuters. However, the current government is popularising Make in India to boost local manufacturing the import duties are unlikely to go away.

The American automobile giant is expected to begin its sales operation in India by the end of this year. Tesla wrote to the government to reduce the federal taxes on the import of fully assembled electric cars to 40%, which will be more appropriate for the imports.

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Tesla has made an argument that if the government reduces the duty to 40% on imported electric vehicles, they can be much more affordable. But the current threshold is still high and will compel the companies to manufacture locally if the demand picks up. Currently, the duties on cars below $40,000 attract 60% and above $40,000, the duty is set at 100% of the value of the car.

The company wrote to the heavy industries and transport industry but they are yet to reply. Elon Musk also commented that the factory to produce cars in India is “quite likely” if the electric carmaker can first begin sales with imported vehicles.

Tata Motors and Ola Electric disagree

Strongly disagree with both. Let’s have confidence in our ability to build indigenously and also attract global OEMs to build in India, not just import. We won’t be the first country to do so! https://t.co/n6k7ShYeJX

— Bhavish Aggarwal (@bhash) July 27, 2021

Hyundai India’s MD S S Kim has backed Tesla’s call for lower duties in India. Bhavesh Agarwal, CEO, Ola has tweeted against it and said to have confidence in our ability to build indigenously and also attract global OEMs to build in Indi, not just import. We won’t be the first country to do so.

Tata Motors,  currently the leading electric vehicle manufacturer in India said on Monday that it expects the government to be consistent and follow the policies that it designed. Tata approached the central government after Tesla wrote to the ministries to lower the import duty on the cars.

P Balaji, CFO, Tata Motors said,

“From Tata Motors’ perspective, the Indian government through the FAME II incentives, eligibility criteria have been very clearly set for the direction in which the country should take to accelerate the adoption of EVs. This has always emphasised affordable EVs and also localisation as per the phased manufacturing plans. I am sure the government will remain consistent to that particular philosophy and the principles of FAME II. This is what all of us are working towards.”

The Indian government launched the FAME-II scheme to accelerate the adoption of electric vehicles in India.

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