Setback For Elon Musk? Finance Ministry Denies Any Tax Waiver For Tesla While It Plans India Entry

Nearly a month after Tesla CEO Elon Musk met India's PM Modi in the US and praised him, it seems that Tesla's plan to enter India 'as soon as humanly possible' seems to not be getting much support from the country.

"Not Considering Any Tax Waiver For Tesla"

Reuters

A day after reports that Tesla could bring its cheaper Model 3 to India for around Rs 20 lakh came out, India's finance ministry has made it clear that it is not considering any duty waivers for Tesla, Revenue Secretary Sanjay Malhotra told Reuters.

Last month, Tesla CEO Elon Musk said that Prime Minister Narendra Modi was pushing the car maker to make a "significant investment" in the country, adding that such an announcement was expected soon.

In the past, talks between the U.S. carmaker and the Indian government have involved seeking customs duty waivers for importing its electric vehicles, which were rejected by India.

"Any duty waiver for Tesla is not under active consideration of the Department of Revenue as of now," Malhotra added.

When India Rejected Tesla's Request Last Year

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Last year, in February, India turned down a demand from Elon Musk¡¯s Tesla for tax breaks to import electric cars, saying rules already allow bringing in partially built vehicles and assembling them locally at a lower levy.

¡°We looked at whether the duties need to be re-jigged, but some domestic production is happening and some investments have come in with the current tariff structure,¡± Vivek Johri, chairman of the Central Board of Indirect Taxes and Customs, said in an interview, as per Bloomberg. ¡°So, it is clear that this is not a hindrance.¡±

Also Read: Elon Musk Launches His New AI Company Named xAI

What Industry Experts Are Saying About Tesla's Plans

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Meanwhile, industry experts asserted that achieving a price range of Rs 20 lakh for Tesla's cheaper model seems like a distant dream. According to experts, Tesla prices are nearly the same across the globe, and currently, the base variant of the Tesla Model 3, which is the cheapest Tesla model available, is priced at $40,240 (approximately Rs 33 lakh).

Importing this model into India will incur a cost ranging between Rs 60 and Rs 66 lakh. India imposes a 100 percent import tax on electric vehicles (EVs) priced above $40,000.

¡°However, this import duty can be eliminated by setting up local production. Despite this, the possibility of acquiring a $40,240 (or around Rs 33 lakh) car for $24,366 (Rs 20 lakh) still seems like a distant dream,¡± senior analyst Soumen Mandal from global research firm Counterpoint Research told IANS, an ET report mentioned.

This cost reduction could be achieved if Tesla models manufactured in India have fewer features compared to the ones available in the US. ¡°For example, certain hardware required for Full Self-Driving (FSD) could be eliminated and, instead, Advanced Driver Assistance System (ADAS) Level 2 could be included,¡± Mandal added.

The battery pack, imported from China, could have a capacity lower than 50 kW, and the electric motors could be of lower power. Additionally, the in-vehicle electronics could be reduced and a smaller centre display used, according to the analyst.

There have been initial talks between the Indian government and Tesla, and it may take some time before a Tesla facility arrives in the country. Tesla is also conducting meetings with industry executives in India.

Also Read: List Of Companies Co-Founded/Headed By Elon Musk

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