The government may create a policy regime for technologically sophisticated vehicle manufacturers, which involves local sourcing.
Citing highly placed sources, a TOI report claimed that import duty on green cars may be reduced from 100 per cent to as low as 15 per cent if the carmakers agree to start work on manufacturing their vehicles in India, and source components locally.
“The government will also take guarantees from the companies towards creating an ecosystem for suppliers, with around 20% of parts being sourced locally in the first two years which would go up to 40% by the fourth year,” the source told TOI’s Pankaj Doval.
Such a policy could potentially green-light Tesla, BMW and Audi’s electric car plans for India.
ET had reported earlier this year that Indian officials weren’t keen on providing duty cuts to Elon Musk-led Tesla unless commitments were made towards local investment. The company had sought a 40% import duty on fully assembled electric cars against the current rate of 60% applicable on those priced below $40,000 and 100% on those retailed above that.The company wants its cars to be treated as electric vehicles, and not luxury cars.India’s present customs duty regime does not differentiate between electric cars and those that run on hydrocarbons, and imposes high duties to encourage local manufacturing.
Tesla first tried to enter India in 2021 by pushing officials to lower the 100% import tax for EVs. Last year, the talks between Tesla and the Indian government collapsed when officials conveyed the company would have to first commit to local manufacturing.
Musk met Indian Prime Minister Narendra Modi in June this year and said that Tesla’s entry into India was getting closer. “I am confident that Tesla will be in India and will do so as soon as humanly possible,” he said. “We do not want to jump the gun on an announcement but I think it is quite likely that it will be a significant investment in our relationship with India,” the Tesla CEO said.
Tesla canned plans to enter India last year owing to high import tax structures yet renewed talks in 2023 by sharing plans with Indian officials about a manufacturing base here.