Just last week, Union Road Transport Minister Nitin Gadkari spelt out Indian government’s stand on Tesla’s plans for India: Tesla can manufacture its electric vehicles in India but the company must not import cars from China.
And yesterday, the Minister was at it again. He said that if Elon Musk's EV company manufactures its vehicles here then it would also get benefits.
The Indian government is repeatedly making this offer because Tesla, at least till now, has been saying that it would debut in India by selling imported cars first.
Last July, Tesla wrote a letter to the think-tank Niti Aayog as well as the ministries of transport and heavy industries to slash the federal tax on fully assembled electric cars imported to India to 40%.
Indian govt's expectation
At present, cars imported as Completely Built Units (CBUs) attract customs duty ranging from 60-100%, depending on engine size and Cost, Insurance and Freight (CIF) value less or above $40,000. For the record, only the base variant of the Tesla Model 3 is priced below $40,000, according to the company’s website.
Tesla has also said would be sourcing more parts from India if tax concessions are offered, and it would also invest in EV charging infrastructure in the country. Last year, Tesla also registered a local company in India, and made a few high-profile hirings, but official information remains scarce.
The government, for its part, asked Tesla to first start manufacturing its iconic electric vehicles in India before any tax concessions can be considered. The car-maker would also have to agree to ramp up domestic auto parts purchases by about 10-15% a year until an appropriate level had been attained. Further, Tesla must reportedly approach India with an auto parts sourcing plan that will be proportional to the company’s vehicle sales expectations for the country. Tesla is also said to have been advised to export India-made components to China and other countries.
The Indian government feels these are reasonable expectations in lieu of extending benefits that will be extended to Tesla in the event of it decides to set up shop here.
But the wordy tug-of-war between the two has been going on for some time now. Some kind of actual action is need of the hour now. The ball is now in Tesla's court, for sure.
