Lately, Tesla has been trying to make a foray into India but has been seeing several entry barriers like its presence in China. Latest among them is Elon Musk’s company’s call for a tax cut being turned down by the Indian government.
The government has said that norms already allow auto firms to bring in partially-built vehicles. They can then assemble them locally at a lower cost.
The Central Board of Indirect Taxes and Customs (CBIC) said that it has reviewed the current tax structure to see if it needs to be changed.
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| Tesla Gigafactory |
The CBIC, however, added that the tax structure is not a hindrance for any company.
This is a clear signal that the central government is not interested in cutting import tax as demanded by Tesla.
The government wants Tesla to produce its electric cars in the country. But Musk wants India to lower taxes for imported cars. This is because the tax is a staggering 100 per cent on imported EVs.
In the case of parts shipped into the country, the import duties range between 15 and 30 per cent.
What Tesla wants is tax cuts to import its e-cars, which the company wants to sell at competitive rates.
If this permission was granted, it would have annoyed companies that are already selling completely-built cars in the country.
In fact, many auto firms have already expressed their concerns about Tesla seeking to bring in its completely-built cars into India only after a tax cut is given.
If this was allowed, it would have given Tesla an undue advantage.
According to a news agency report, Tesla is lobbying hard for its India entry and it has not presented any manufacturing plan to the government. So, there is a deadlock so far as its entry plans are concerned.
What is it that is most likely hampering Tesla’s India plan?
Even as India demands that the auto giant set up a manufacturing facility in the country, Tesla wants to bring in its models from China (which is a low-cost manufacturing country) into India.
Also, the China factor is making Tesla’s India entry even more difficult. This is especially in the wake of the prevailing border tension between the two countries.
If Tesla’s tax is reduced, it could take a big toll on India’s domestic industry and Indian EV players could be hit by this.
In fact, the Tatas and even Ola (which now makes electric two-wheelers) had put up strong objections to Tesla’s demand.
India slaps a 100 per cent import duty on cars that are fully imported, having a cost of $40,000 (Rs 30 lakh) or more. Cheaper cars, however, have to pay 60 per cent duty.
Tesla has already been invited by five states in India — Maharashtra, Telangana, Punjab, West Bengal, and Tamil Nadu — to launch operations.
But it seems that the biggest entry barrier for Tesla coming into India is the China hurdle besides the unfair means by which it is seeking to gain a toehold into the country.
After all, how can it be sales in India and jobs for China. Hence, India may put up a hurdle for Tesla because of its China link.
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