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India rules out special incentives for Tesla

We will never provide company or enterprise-specific incentives for EVs: Govt official

India rules out special incentives for Tesla

They have asked for some concessions, but we never came to any conclusion. If any concessions are given, these will always be linked to fairly stringent performance criteria for everybody - A central govt official

No special sops

  • Tesla sought for cut in import duties on EVs
  • But govt said any concessions will be linked to performance criteria
  • India asked Tesla to apply for incentives under existing schemes
  • Tesla to source components worth $1.9 bn from India this year

New Delhi: India will never provide company or enterprise-specific incentives in the electric vehicle sector, a top government official said on Friday, amid a push from American electric carmaker Tesla for special sops to set up its factory in the country. If the government has to consider providing incentives then it will only be for all EV makers and entrants who want to come to India, the official said.

The official added that inter-ministerial discussions have happened on the customs duty concession demand of the US-based electric carmaker Tesla, but “we never” came to any conclusion on those.

In 2021, the US-based electric carmaker demanded a reduction in import duties on electric vehicles (EVs) in India. It had requested the government to standardize the tariff on electric cars to 40 per cent irrespective of the customs value. At present, cars imported as completely built units (CBUs) attract customs duty ranging from 60 per cent to 100 per cent, depending on engine size and cost, insurance and freight (CIF) value less or above $40,000.

“Never. It will never be a company-specific. It will always be for all entities, companies. If any concessions are given, these will always be linked to fairly stringent performance criteria for everybody. It’s never going to be an enterprise-specific thing,” the official said when asked if the government is considering specific concessions for Tesla.

The official clarified that the reports on duty concessions and others related to the company are “mostly in the nature of speculation”. “They have asked for some concessions but we never came to any conclusion. Nothing has come to any conclusion at all on that,” the official added. Last month, Commerce and Industry Minister Piyush Goyal visited the manufacturing facility of US-based electric vehicle major Tesla in Fremont, California and said that the company would be doubling its auto components imports from India.

The world’s largest electric car producer Tesla Inc’s chief Elon Musk met Prime Minister Narendra Modi in June in New York and after the meeting Musk had said that he planned to visit India in 2024. There are reports that India is looking at giving customs duty concessions to Tesla for setting up a plant in the country.

In September, Goyal said the company is looking to source components worth around $1.9 billion from India this year against $1 billion in 2022. Going forward, demand for electric vehicles will increase and it will help in pushing the growth of the sector. Earlier, the government had stated that it is not looking to frame a separate policy for providing incentives to Tesla, and the company can apply to avail of support measures under existing schemes like PLI for auto and advanced chemistry cells. The government has rolled out production-linked incentives (PLI) schemes (PLI) for advanced chemistry cell (ACC) battery storage with an outlay of Rs 18,100 crore and Rs 26,058 crore PLI scheme for auto, auto-components and drone industries. In August 2021, Musk said Tesla might set up a manufacturing unit in India if it first succeeded with imported vehicles in the country. He had said Tesla wanted to launch its vehicles in India “but import duties are the highest in the world by far of any large country!”

Currently, India imposes 100 per cent import duty on fully imported cars with CIF (Cost, Insurance and Freight) value more than $40,000 and 70 per cent on those costing less than the amount. Certain domestic EV makers are also against extending any kind of company-specific incentives.

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