Tesla demand to start engine in India: Manufacturing only after nod for sale & services

The company’s entry into India has been on hold since 2019 as it wants lower customs duty on imported electric vehicles (EVs) in the country, a demand the government is yet to accept, instead requiring the automaker to set up a manufacturing base in India.

EV maker’s duty cut demand

Responding to a user’s question on Twitter about the company’s manufacturing plans in India, Musk on Friday tweeted, “Tesla will not put a manufacturing plant in any location where we are not allowed first to sell & service cars”.

Tesla had last year written to the government seeking a reduction in import duties on fully assembled cars.

At present, customs duty ranging from 60 per cent to 100 per cent is levied on cars imported as completely built units (CBUs), depending on the engine size and cost, insurance and freight (CIF) value less or above $40,000.

Govt wants production first

Earlier this year, Road Transport Minister and Highways Nitin Gadkari had said that if the US-based auto maker was ready to manufacture its EV in India, then there was “no problem”, but the company must not sell imported cars in India. “If he wants to manufacture in China and sell in India, then it cannot be a good proposition for India,” the union minister had said.

Tesla’s giga factory in Shanghai is currently the closest manufacturing facility the company has to India.

Senior government officials had earlier told The Sunday Express that Tesla, in its proposal, did not detail any setup for manufacturing the electric vehicles.

The government’s primary concern was that Tesla is seeking duty cuts and then proposing domestic manufacturing conditional to the sales response in the country.

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The tax cut demand hence did not find favour as it was also felt that other firms may seek similar concessions.

“Tesla wants customs duty cuts for imports. They are welcome to come and produce. But his argument is first I want to see how many people in India buy my vehicle. For that, he needs a lower customs duty … if there’s enough turnover, I might come. It’s not a poor man’s car. They are not producing a small EV equivalent for the middle class. They are producing a super class car. Why should we give a Customs exemption? If you can afford it, please pay the duty and take it,” a senior government official had earlier said.

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