In a significant setback to Tesla’s aspirations in India, the government has categorically stated its reluctance to consider tax reductions on imported electric vehicles. Som Parkash, the Minister for State for Commerce and Industry, confirmed in parliamentary proceedings that there is presently no contemplation of exempting local value addition costs or providing subsidies on import duties for electric vehicles within India.
The move directly impacts Tesla’s strategy, as the company, headed by Elon Musk, had sought tax concessions to establish a substantial manufacturing presence in the country. Tata Motors currently holds the pole position in the Indian electric car market, with its Nexon EV claiming the top spot in sales.
Contrary to prior indications of a policy in the works, allowing international companies to import electric vehicles at reduced tax rates on the condition of future local manufacturing, the government’s unexpected announcement has altered the landscape of discussions between Tesla and Indian authorities.
Despite earlier reports of advanced talks between Tesla and the Indian government, focusing on local manufacturing and the establishment of a mega factory within the next two years, the recent government statement suggests a potential delay in these plans. This development comes as Elon Musk had expressed his company’s interest in investing in India as recently as June.
Union Commerce Minister Piyush Goyal had previously disclosed Tesla’s plans to procure parts worth 1.9 billion from India in the current year. The government’s firm stance on import duty subsidies may reshape the timeline for Tesla’s investments in the Indian market.
