India Welcomes Tesla with a New Program that Waives Import Taxes on Electric Vehicles

India’s new scheme to waive the hefty import taxes on electric vehicles is the first step towards the government finally welcoming Tesla and other EV producers.

However, there are prerequisites.

The largest car market in the world, India, is where Tesla is still new to the business.

For years, the carmaker has been in negotiations with the nation to figure out a way around its high import taxes on new cars.

Since 2021, there have been a few times when it appeared as though they would reach an agreement, but it never did.

Tesla intends to expand the new market with service centers and Superchargers using its customary strategy of initially importing its electric vehicles from its overseas manufacturers; but, because to the hefty import charges on new cars, this is not feasible.

India has been adamant that Tesla establish a manufacturing there instead.

There seems to have been some serious work toward a compromise over the past year.

After meeting with Prime Minister Narendra Modi in the US last year, Tesla CEO Elon Musk announced that the company would be investing in India “as soon as humanly possible.”

The government has now made public a fresh initiative that might facilitate the agreement. In a press statement, they stated:

There are three primary prerequisites for businesses to take advantage of the deal, which allows EV makers to access lower 15% import tariffs on EVs priced “$35,000 USD or above for a total period of 5 years.”

• A minimum investment of Rs 4150 Cr (~$500 million USD) is required.

• Within three years, establish an EV manufacturing plant in India with a 25% localization level by the third year and a 50% localization level by the fifth year.
• The number of EVs that automakers can import at reduced prices under this agreement is capped at 40,000 altogether, with a maximum of 8,000 units each year.

According to a recent Indian story, Tesla and the government of that nation were nearing an agreement that would see Tesla produce its more affordable next-generation electric car there.

By year’s end, Tesla has been hinting at a possible announcement about a new production location.

Electrek’s Opinion

This appears to be a fair middle ground. In order to pay for infrastructure investments in servicing and charging while building a plant over a three-year period, Tesla may begin importing Model 3 and Model Y.

I’m not sure if Tesla will pursue it, but given all the talks that have taken place in the past few years, it seems plausible.

However, 40,000 units is a bit of a cap.