Union Finance Minister Nirmala Sitharaman on Friday rejected reports that claimed that the government is considering cutting import tax on electric vehicles for automobile makers, especially Tesla. The clarification came after news agency Reuters reported that the central government is mulling to reduce the import tax on cars that cost more than Rs 33 lakh to 15 per cent from the current 100 per cent and to 70 per cent for the rest. The percentage is. Speaking to reporters on the sidelines of the B20 summit, Union Finance Minister Nirmala Sitharaman said that there is no plan to reduce import tax on electric vehicles.
A Reuters report had said that the cut in import tax could help companies like Tesla who wish to enter the Indian markets and have recently proposed to set up a car factory in India. In the Reuters report, quoting an official aware of the development, it was said that Tesla's proposal is agreed and the government is showing interest.
Tesla's concerns about the Indian market
Tesla founder Elon Musk has expressed concern over high tariff rates in India and the company, after much deliberation, has started discussions regarding Tesla's possible launch in the domestic automobile market. In 2021, Tesla tried to enter India by advocating a reduction in the current 100 per cent import tax imposed on electric vehicles (EVs). However, a potential deal between Elon Musk and India did not materialize as Indian officials insisted on local manufacturing as a condition for the arrangement.
Water turned on the hopes of EV makers
Nirmala Sitharaman's clarification after the Reuters report dashed the hopes of many EV makers. In fact, if the government decides to reduce the EV import tax, then the way can be opened in India for global EV companies along with Tesla. Which can be a direct loss to Indian auto companies, who have entered the EV segment or are preparing to do so. At present, it is not clear whether the decision to retain the earlier import tax rate will affect Tesla's plans to set up a car factory. Tesla's most popular EV car costs $47,740 in the US.
Why is this news catching on?
The news of reducing EV import tax towards Reuters has not caught hold just like that. After which the Finance Minister of the country herself had to come forward to deny this news. In fact, Indonesia has abolished 50 percent import tax to woo Chinese EV makers and Tesla. The Indonesian government wants China's EV makers and Tesla to invest more in their country and do manufacturing. After the Reuters report, even though a reply has come from the Central Government, but no statement has come out from Tesla in this matter.
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