Need tax sops? Then Make in India: Centre to Tesla

Need tax sops? Then 'Make in India': Centre to Tesla

If Elon Musk wants tax concessions, he will first have to ‘Make in India’, the heavy industries ministry has reportedly told the US-based electric car major Tesla.

The world’s foremost electric vehicle (EV) maker was told that since the Government of India was not offering this benefit to any other automobile company, it won’t be fair to extend duty benefits to Tesla, news agency PTI reported quoting government sources.

Union Road Transport Minister Nitin Gadkari had earlier urged Tesla to make the most of the “golden opportunity” of setting up a manufacturing facility in India. He said that since Tesla is sourcing several auto parts from Indian automakers, it would be economically viable for the company to set up a base here.

Tesla has played tough by asking for cut in import duties on EVs. A few months back, Tesla CEO Elon Musk tweeted, saying he is very keen to launch its electric cars in India, but finds India’s import duties way too high.

At present, India charges customs duty in the range from 60% to 100% on imported cars. The duty is calculated factoring in the engine size, cost, insurance freight value less or above $40,000.

The US auto firm has registered its opposition to import tariff of 110 per cent on vehicles with customs value above USD 40,000, calling it “prohibitive” for zero-emission vehicles. It wants the Government of India to fix the tariff on electric cars at 40 per cent irrespective of the customs value, besides taking back social welfare surcharge of 10 per cent per EV.

Also read: Pandemic disrupts trade balance; exports swell, but so do imports

The government has argued that it does not extend such benefits to other auto makers and doing so for Tesla will negatively impact foreign investment. Tesla responded saying its proposal will not adversely affect investment in India because no Indian original equipment manufacturer (OEM) currently produces a car (EV or ICE) with ex-factory price above USD 40,000 and only 1-2 per cent of cars sold in India (EV or ICE) have ex-factory/customs value above USD 40,000.

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