Nitin Gadkari, the Indian Minister for Road Transport and Highways, has set the record straight in a recent conversation. He expressed that while Tesla Inc. (NASDAQ: TSLA) is welcome to set up shop in India, the terms will be dictated by the Indian government. Gadkari clarified that Tesla would receive concessions only if it agreed to local manufacture, not for selling units produced in China, as reported by the Economic Times.
Rumors surfaced last week indicating a possible reduction in import duties for companies like Tesla, provided they commit to domestic production. The Indian Central Government’s new strategy could potentially slash import duties on eco-friendly vehicles from an exorbitant 100% to a mere 15%. However, this would be contingent on these automakers initiating manufacturing operations in India and sourcing components locally.
Earlier in the year, there was speculation about Indian authorities being hesitant to offer Tesla any duty concessions without a firm commitment to invest in the local economy. Despite Tesla requesting a 40% import duty, the current rates remain at 60% for electric cars priced below $40,000 and 100% for those priced higher. Tesla’s stance on the matter is that their cars should be viewed as electric vehicles, not luxury commodities.
India’s existing customs policy doesn’t differentiate between electric and traditional fuel vehicles, enforcing high duties to encourage local production. Tesla’s initial attempt to break into the Indian market in 2021 was hindered by these hefty import taxes. However, hopes were reignited following a meeting between Tesla CEO Elon Musk and Indian Prime Minister Narendra Modi in June. Musk hinted at a “significant investment” in India, suggesting a promising future for Tesla’s operations in the country.
After putting its Indian market entry plans on hold last year due to the high import tax structure, Tesla reopened discussions in 2023, hinting at the possibility of establishing a manufacturing base in India.