Tesla Gets Its Way? Report Says India Mulls Big Duty Cut On EV Imports

Tesla, Inc's. TSLA clout will likely make the Indian government to come around, if reports are to be believed.

What Happened: The Indian government is considering a reduction in imports duty applicable to electric cars to 40% from the current 60% rate, Reuters reported, citing two senior government officials.

"We haven't firmed up the reduction in duties yet, but there are discussions that are ongoing," the officials reportedly said.

The duty cut, according to the report, is applicable to only EVs.

For the uninitiated, India currently levies 60% import duty on cars priced below $40,000 and 100% import duty on those priced above the ceiling.

"India's finance and commerce ministries, as well as its federal think tank Niti Aayog, chaired by Prime Minister Narendra Modi, are discussing the proposal and all stakeholders will be consulted," the sources reportedly said.

Related Link: Tesla Analyst Upgrades The EV Maker's Stock And Ups Price Target By 20%: Here's Why

Why It's Important: Tesla has begun preparations to launch in India, having set up its registered office and headquarters. The company is on the lookout for a location to set up its first showroom in Mumbai, India's business capital. A slew of personnel has also been hired to run the Indian operations of the EV giant.

The company has in the past sounded out its desire to test the Indian market by selling its imported Model 3 vehicles, which are priced below $40,000, before setting up a manufacturing plant in India.

To increase the uptake, Tesla is aiming to keep its car affordable. Toward that pursuit, the company has been lobbying with the Indian government for an import duty cut.

Reports that emerged in early August suggested the Indian government isn't willing to accede to Tesla's request, given its agenda to protect domestic manufacturing.

The Indian EV market is in its nascent stage, with the penetration of zero-emission vehicles abysmally low. This under-penetration makes the Indian EV market attractive, given the potential it offers