The Government of India has implemented an electric vehicle policy, aiming to encourage the adoption of electric cars. Affordable electric cars are available in India starting from Rs 7 lakh, with manufacturers such as MG, TATA, and Mahindra offering excellent options within the Rs 20 lakh price range. In the realm of luxury electric vehicles, renowned brands like Mercedes, Audi, Porsche, BMW, Volvo, and Jaguar offer impressive models. However, Tesla vehicles remain a challenge to obtain in India, despite efforts from its owner, Elon Musk, to ensure their presence in the country. Despite these challenges, the Government of India has proceeded with the introduction of the EV policy.
India is a big market for EV
Currently, a 100% customs duty is imposed on the import of electric vehicles (EVs) in India. However, the Ministry of Heavy Industries has recently introduced the ‘Dhansu Scheme’ to promote the manufacturing of EV cars within the country. Under this scheme, companies establishing manufacturing plants with a minimum investment of $50 million (approximately Rs 4,150 crore) will be eligible for exemption in excise duty. Additionally, as per the Finance Ministry’s EV Incentive Scheme, companies setting up manufacturing plants in India will be able to import EVs valued at a minimum of $35,000 (around Rs 29 lakh) at a 15% duty rate by 2031.
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Tesla’s CEO has expressed a desire to sell cars in India on terms favorable to the company since 2019. Until recently, Tesla has been insistent on seeking a reduction in import duty rates from the Indian government. However, the Government of India has maintained a clear stance on tax concessions, stating that exemptions will only be available to those who establish production plants within the country. Sandeep Jhunjhunwala, a partner at Nangia Anderson LLP, believes that this concessional duty arrangement will facilitate the entry of foreign EV manufacturers into India.
In line with this approach, the Indian government has reduced taxes on imports of a certain number of electric vehicles (EVs) by up to 85 percent as part of a new plan aimed at attracting investment from major automobile manufacturers. The government has clarified that this policy has been introduced to encourage investment in the field of electric vehicles.
Possible price range of Tesla
The cheapest Tesla car available in India is priced at around Rs 70 lakh. Given Tesla’s intention to enter the Indian market and the government’s clear policy on tax concessions tied to local production, if Elon Musk agrees to comply with the Indian government’s requirements, it could pave the way for Tesla vehicles to be available at a lower price range in India. With reduced taxes and potential local production, the same car that costs Rs 70 lakh could potentially be priced around Rs 37 to 40 lakh, making it more accessible to Indian consumers.
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