Tesla Said To Hit Stalemate With Indian Government Over Tax Relief But 6 States Rush To Invite EV Maker To Set Up Base

Tesla Inc TSLA CEO Elon Musk has been invited by at least six Indian state governments to set up a manufacturing plant with them, The Indian Express reported on Wednesday.

What Happened: The state governments of Karnataka, Telangana, West Bengal, Maharashtra, Punjab and Tamil Nadu have extended the invitation to the world’s leading electric carmaker just days after its billionaire CEO said on Twitter that its India foray has been mired in red tape.

See Also: Indian Government Fires Back At Elon Musk As He Blames Red Tape For Delay In Tesla India Entry

Musk’s social media reveal was met with a response from India’s heavy industries ministry that asked the electric car major to first start making its popular electric vehicles in India before demanding tax concessions.

Further, Maharashtra’s state environment minister has urged the central government to lower tax rates for a limited-period on imported cars in the budget on Feb. 1, as per a Reuters report.

Why It Matters: The Austin, Texas-based Tesla initially aimed to enter India last year. It has instead been lobbying with India’s government to lower import taxes on electric vehicles before it begins selling cars in the country.

Tesla's lobbying efforts over potential tax benefits seemed to have reached a stalemate as India is not keen to give the company any breaks without a commitment to manufacture locally, Reuters reported.

Musk tweeted in July to say that the import duties in India are the highest in the world. Tesla says that India's duty structure would not make its business in the country a "viable proposition."

See Also: Tesla Superchargers Spotted In India Even As EV Maker Said To Face Fresh Regulatory Roadblock

Electric vehicles draw an import duty of 100% if priced above $40,000 and 60% for models below $40,000. 

India has reportedly asked Tesla last year to increase local procurement and furnish a detailed manufacturing plan before it approves the electric vehicle maker’s demands for lower taxes.

Price Action: Tesla shares closed 3.4% lower at $995.65 a share on Wednesday.