India’s Minister for Heavy Industries, H.D. Kumaraswamy, announced that Tesla has expressed no interest in manufacturing electric vehicles (EVs) within the country.
The automaker is currently planning to import cars into the country.
This revelation comes as India finalizes a new EV policy aimed at attracting foreign investment through substantial import tax reductions for automakers committing to local production.
EV policy to lure Tesla
The newly unveiled policy offers a reduced import tax rate of 15%, down from the standard 70%, for a limited number of electric cars, provided companies invest at least $500 million in local manufacturing and commence operations within three years.
Additionally, manufacturers are required to meet specific domestic content thresholds, achieving 25% localization by the third year and 50% by the fifth year.
Each approved company can import a maximum of 8,000 cars per year at the lower tax rate.
If the company imports less than 8,000 cars, it can carry forward the unused limit to the next year, India’s government press release said.
Originally designed with Tesla in mind, the policy aimed to entice the EV giant to establish a manufacturing base in India.
However, despite previous indications of interest, including Tesla’s efforts to hire senior staff and seek showroom spaces in cities like Mumbai and New Delhi, the company has decided against local production.
“Tesla, we are not actually expecting (interest) from them… They are not interested in manufacturing in India.”
Kumaraswamy stated, highlighting the company’s current focus on importing vehicles into the Indian market.
Tesla was reportedly looking to import EVs from its Berlin facility to India.
This is despite Tesla CEO Elon Musk’s comments that tariffs on imported vehicles in India are too high.
The new policy also allows limited investment in research, machines, and fast charging.
A lack of fast chargers has prevented more adoption of EVs by customers in the country’s developing market.
India’s EV push
India’s push for local EV manufacturing is part of its broader strategy to increase the share of electric vehicles in the country’s car market from the current 2.5% to 30% by 2030.
The government believes that domestic production will not only create jobs but also reduce dependency on imports, foster technological advancements, and contribute to environmental sustainability.
While Tesla remains hesitant, other global automakers have shown enthusiasm for India’s EV policy.
Companies like Mercedes-Benz, Volkswagen, Hyundai, and Kia have expressed interest in establishing manufacturing facilities in the country, said the minister, signaling a positive response to the government’s incentives.
On the domestic front, Indian automakers such as Tata Motors and Mahindra & Mahindra have already made significant investments in EV production.
Tata Motors, for instance, is focusing on locally produced EV batteries to maintain its competitive edge amid intensifying competition.
These companies have also voiced concerns over import duty reductions, fearing that such measures could undermine their investments and the growth of the local EV industry.
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