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Tesla's Plea For Duty Cut On Fully Assembled EVs Rejected Again

By Linus Garg
First publised on 2022-02-05 11:34:15

About the Author

Sunil Garodia Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

It has been reported that the Centre has yet again rejected Tesla's plea to lower duty on the import of fully assembled, ready-to-ride EVs for sale in India. This was bound to happen. The government is incentivizing local production or assembly under its Make in India initiative. Hence, it encourages car makers to import partly assembled vehicles along with the rest of the parts and set up assembling units in India to sell them after putting them together. The government sees this as a prelude to the final production of the vehicles in India.

Tesla is aware of this policy but perhaps wants to test the waters by bringing in a few thousand complete units and sell them here. Since Tesla EVs are priced at a premium, the high duties (up to 100%) would have made them costlier and the company is not sure whether they will sell at the inflated price. Hence it was requesting for a duty cut. But the Centre cannot make an exception in Tesla's case and the policy must remain same for everyone.

If Tesla is serious about its Indian foray, it must take up the invitation of any of the five states that have invited the company to set up the assembling/manufacturing unit in their state. It can negotiate favourable terms with these states and start assembling the units in India. The duty on parts for assembling in India is only between 15 and 30%. That would give it a better option rather than importing full vehicles at a reduced duty.

For, with India committed to take up rapid conversion to electric vehicles, the market is huge. Also, there is also a big market for premium cars of the kind Tesla makes. Hence, one thinks that the hesitation to make investments and get into manufacturing in India is actually a wrong move on Tesla's part. It should support the Make in India initiative and take advantage of the low duties on the import of SKD (semi-knocked-down) units to make its vehicles in India. 

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