India to Expedite Required Approvals for Elon Musk’s Tesla Investment in India

Published On: 7 November 2023
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Senior Tesla executives have also shared their plans with the Indian government to set up battery and car manufacturing facilities in the country.

India is looking forward to getting all the approvals required to bring Elon Musk’s Tesla to the country by January 2024. Senior Tesla executives have also shared their plans with the Indian government to set up battery and car manufacturing facilities in the country. Tesla has shown interest in setting up its manufacturing facilities and providing India with its supply chain ecosystem.

On Monday, a meeting was held with top officials in the prime minister’s office with a desire to carry stock of the upcoming phase of EV manufacturing in India. Though the main motive of the meeting was to discuss general matters, approval for Tesla’s proposal by next year was also discussed in the meeting.

After the CEO of Tesla, Elon Musk, met PM Narendra Modi in the US, the ministries of heavy industry, electronics and IT, and commerce and industry have been discussing Tesla’s plans to set up a manufacturing plant in India. The government and ministry departments have been sorting out any of their differences with Tesla to make way for the EV maker’s India facility setup plans as early as possible.

The policies of the Indian customs duty regime impose high duties on both hydrogen and electric cars. Tesla wants its automobiles to be treated as electric cars and not as luxury cars. Against the rate of 60 percent applied to vehicles priced less than $40,000, the company sought 40 percent import duty on electric cars. This high duty has been an issue between the Indian government and Tesla. The US-based EV maker wants to sell its cars in India before setting up a manufacturing unit.

India may introduce a new import policy category to make sure that cars driven by clean energy will have a less tax imposition. This policy will not just be for the US-based EV maker, Tesla, but for other manufacturers as well. The manufacturers who are planning to set up manufacturing facilities in the country will be immensely benefited from this new import policy.

Tesla has been applying for an import duty reduction, but after failing to reduce the tax amount, the EV maker dropped its plans earlier. Instead of granting any reduction in import duties, New Delhi had insisted on commitment to support domestic industry. The production-linked incentive scheme offers direct subsidies to manufacturers, and the Indian government has also asked Tesla to put in an application for this scheme in place of looking for customs duty concessions.