Tesla requests Musk-Modi meeting to resolve import duty issues
Following a closed-door meeting with the Indian government officials, American electric car maker Tesla has now requested an in-person meeting of its CEO Elon Musk and Prime Minister Narendra Modi. India remains on the fence about subsidizing import duties for Tesla without any commitment to local manufacturing. This roadblock makes it "unviable" for the carmaker to enter Indian markets. Here are more details.
In April, Tesla announced plans to open dealerships in India, and some display cars were imported as well. In late August, Tesla's Indian subsidiary Tesla India Motors secured the approval of central agency Vahan Sewa for four vehicles. However, a request to reduce import duties filed in July was shot down. The government maintained that it would promote EVs by lowering local taxes.
Reuters reported that the carmaker had appealed to the government so it can gauge interest before committing to local manufacturing. According to one unnamed source, when the proposal was rejected, Tesla said India's duties wouldn't make the business a "viable proposition." The Indian government levies a 60% duty on all EVs that cost $40,000 or less. Above that price, a 100% duty is levied.
If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely.— Elon Musk (@elonmusk) July 23, 2021
A government official reportedly said temporarily lowering duties could "boost India's investor-friendly image and green credentials." Tesla's pleas for an import duty subsidy have unsettled the Indian auto industry. Tata Motors that recently raised $1 billion for local EV production from investors including TPG said subsidizing Tesla's imports would contradict India's plans to boost domestic EV manufacturing.
Separately, three sources familiar with the matter told Reuters that Tesla has put in a request for its CEO Elon Musk to meet Prime Minister Modi. However, it should be noted that Modi's office, Tesla, and Khurana didn't respond to requests for comment on the matter. The exact details of what the officials told Tesla remain hazy.