India can supply Tesla a partial customs break and is asking for an in depth funding plan

India could offer partial tariff relief to electric vehicle maker Tesla and has caught up on the company’s detailed plans to invest in the country, officials familiar with the considerations told ET.

The ministries involved are considering Tesla’s request to lower the import tariff. “We can offer some relief … but we need to know what their plans are,” said one official. A final assessment will be made once the company provides it, another official said.

ET reported in its July 27 issue that the government would be ready to lower import tariffs on electric vehicles (EVs) if the company promised to start production in the country. Tesla has applied for a 40% import duty on fully assembled electric cars, while the current rate of 60% applies to vehicles under $ 40,000 and 100% to vehicles above that threshold. Tesla reported this issue in a letter to various government departments and departments. The company wants its cars to be treated as electric vehicles rather than luxury cars. Tesla executives have met with senior government officials on the issue.

India’s current tariff system does not differentiate between electric cars and those that run on conventional fuels, and imposes high tariffs to encourage local production. PM Narendra Modi has identified clean energy and electric vehicles as priority areas and these are encouraged through several incentives.

The goods and services tax on electric vehicles has been reduced from 12% to 5%, while the tax on chargers and charging stations for electric vehicles has been reduced from 18% to 5%. The Hybrid and Electric Vehicle Faster Adoption and Manufacture (FAME) program provides incentives for the purchase of electric vehicles by lowering the price beforehand.

Tesla boss Elon Musk has announced India’s high import tariffs on electric cars. “We want to do that, but the import duties are by far the highest in the world of any major country!” He had previously tweeted in response to a question about the market launch in India. “In addition, vehicles with clean energy are treated in the same way as diesel” or gasoline, which does not seem to be entirely compatible with India’s climate goals, “he said.

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