India’s Revenue Secretary Denies Considering Tax Incentives for Tesla

Elon Musk Tesla
Elon Musk Tesla
Credit: AFP

Indian authorities have dismissed claims that they are actively considering duty waivers for Tesla, the electric vehicle company led by Elon Musk. This announcement comes in the midst of reports indicating that Tesla has been in discussions regarding investment proposals to establish local manufacturing and produce approximately half a million electric vehicles annually in India.

Although India expresses its interest in having Tesla manufacture vehicles within the country, Tesla has previously expressed its intention to begin with exports in order to gauge the demand and viability of the market. Despite these discussions, the Department of Revenue has clarified that they are not currently actively considering any duty waivers for Tesla.

Last year, Tesla’s plans for entering the Indian market encountered challenges as the government declined to lower import taxes on their vehicles. India imposes significant import taxes, with electric vehicles being subject to tariffs as high as 100%. In May of this year, Tesla engaged in fresh discussions with government officials to explore potential incentives for both their cars and battery manufacturing in India.

In addition to the tax-related concerns, experts have expressed skepticism regarding the feasibility of achieving a price range of Rs 20 lakh for Tesla’s more affordable model in India.

The pricing of Tesla vehicles remains consistent worldwide, and the base variant of the Tesla Model 3, which is currently the least expensive option, is priced at approximately Rs 33 lakh ($40,240). Importing this model into India would incur additional costs ranging between Rs 60-66 lakh due to the country’s 100% import tax on electric vehicles priced above $40,000.

Officials have previously stated that it is crucial for Tesla to initiate local production within India before tax benefits can be considered. Therefore, while India remains eager to welcome Tesla’s manufacturing presence, discussions regarding tax incentives and duty waivers are on hold until Tesla begins local production and demonstrates its commitment to the Indian market.


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