India Has Placed These Conditions On Tesla Before It Considers Tax Breaks

India has asked Tesla Inc TSLA to first increase local procurement and furnish a detailed manufacturing plan before it considers the Elon Musk-led electric vehicle maker’s demands for lower taxes, Bloomberg News reported on Friday, citing a source.

What Happened: The details were sought by India's ministries of heavy industries and finance in a recent meeting with Tesla to discuss lower tax breaks for electric vehicles imported from overseas.

The ministry has also asked Tesla to get back with views on building knocked-down units or partially built vehicles, which attract a lower import duty when compared with completely built units.

See Also: Tesla Gets Volkswagen Backing In Calling For India To Slash Heavy Import Taxes On EVs

Why It Matters: The Palo Alto, California-based Tesla had last month had in a letter the India’s Prime Minister Narendra Modi sought a reduction in import duties on electric cars to 40% from the current 60% to 100%.

Musk had last month criticised India’s restrictive policies and tweeted to say that while Tesla wants to make cars in the country, the import duties there are the highest in the world and that the clean energy vehicles were “treated the same as diesel or petrol” ones.

We want to do so, but import duties are the highest in the world by far of any large country!

Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India.

 

— Elon Musk (@elonmusk) July 23, 2021

India’s EV sales are currently small and the world's fifth-largest car market, which moves about 3 million vehicles annually, sees the majority of cars sold for far below an average price of $10,000.

In comparison, Tesla’s most affordable electric vehicle is sold at a ticket price of $40,000 and up in the United States. 

Tesla also requested to scrap the 10% social welfare surcharge that is levied on all imported cars.

Tesla claimed it procures components worth $100 million from India and suggested that figure would increase following any tax concessions, according to the report. 

The EV maker plans to make significant direct investments in sales, service, and charging infrastructure and evaluate broader investments in manufacturing once it gets the rebates.

TSLA Price Action: Tesla shares were down 0.58% at $718.09 at last check Friday. 

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