Tesla Proposal Prompts India to Consider Import Tax Cut

The potential launch plans of Tesla in India appear to be moving forward. India is reportedly considering a policy that would lower import taxes for automakers willing to produce some of their vehicles there, according to a recent report.

The country’s import taxes, which are currently set at 100% for vehicles that cost over $40,000, have long prevented Tesla from entering the Indian market. Bear in mind, that Tesla’s best-selling Model Y crossover starts at $47,740 in the US before tax credits.

Related: Elon Musk of Tesla Eyes Significant India Investments After Meeting Modi

According to the latest Reuters report, India’s updated policy would permit automakers to import fully built cars at a reduced tax rate as low as 15%. Citing a source close to the matter, the report revealed that the Indian government is seriously interested in Tesla’s proposal. However, since the policy is currently in the planning stages, so the final adjusted tax rate may change.

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Lower import taxes could aid Tesla in selling its entire lineup of vehicles in India, not just the company’s most popular cars. For context, Tesla is reportedly considering the production of a low-cost electric vehicle in India that would be priced at around $24,000.

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While the news is exciting, an official also noted that the government might not move very quickly. This is because any adjustments to the country’s import taxes may risk the disruption of India’s auto market. It may potentially even put domestic automotive players like Tata and Mahindra at risk. According to an unnamed Indian government official:

“This is going to go through a lot of deliberations even though the government is keen on getting Tesla. That’s because of the impact on domestic players.”

Related: Tata Motors Achieves Landmark Milestone of 1 Lac EV Sales

The Indian officials reportedly conveyed there would be no special incentives for Tesla’s market entry, and the proposal for a low import tax, conditional on a manufacturing commitment, was touted by Tesla to keep both sides happy.

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