Nirmala Sitharaman, India’s finance minister, denied receiving a request to lower import taxes on electric vehicles shortly after rumours surfaced suggesting that the government was doing so to help Tesla enter the country.
On August 25, Sitharaman told reporters on the margins of the B20 Summit in New Delhi, “No proposal is before me to cut import tariff on electric vehicles.
Sitharaman’s response came after the news agency Reuters reported, citing sources, that the government is considering a policy that would permit automakers to import fully-built EVs into India at a reduced tax of as little as 15%, as opposed to the current 100% that applies to cars that cost more than $40,000 and 70% for the rest.
For instance, the base price of Tesla’s most popular Model Y in the United States is $47,740 before tax credits.
If such a strategy is implemented, the cost of imported EVs, which local automakers have been keen to avoid, may be drastically reduced. Beyond Tesla, it may also provide access to the third-largest auto market in the world, where EV sales are still a small percentage of overall vehicle sales but are increasing quickly.
A third source told the news agency that the lower import duties would make it easier for Tesla to sell all of its models in India rather than just the new vehicle it plans to produce there.
Similar actions have been taken by other nations to encourage EV manufacturing commitments. For instance, Indonesia has proposed lowering import taxes from 50% to 0% for EV manufacturers considering investments.