India considering 'partial customs relief' for Tesla

Tax | | MIC Customs Solutions |

Tesla is seeking partial customs relief for electric vehicles imports from India, but the country wants some assurances in return.

India is considering offering partial customs relief for imports of Tesla’s electric vehicles (EVs) and is scrutinizing the country’s investment plans for the nation, according to the Economic Times.

An official told the news provider: “We can offer some relief... but we need to know what their plans are.”

It comes after reports the government is keen to lower import duties on EVs in return for an assurance from Tesla that it intends to start manufacturing in India.

Tesla is looking to lower the import duty for fully assembled EVs costing less than $40,000 from 60 per cent to 40 per cent. At present, EVs above $40,000 are subject to a 100 per cent import duty.

At the moment, the Indian government doesn’t differentiate between EVs and cars running on traditional fuels, with customs duties designed to encourage local manufacturing and not prioritize the environment.

It’s a different matter for the Goods and Services Tax (GST), however, as the government has reduced it from 12 per cent to five per cent for EVs.

The GST on chargers and charging stations have also been slashed, with these items designed to keep EVs going seeing the tax drop from 18 per cent to five per cent.

Tesla has said it obtains components for its EVs worth $100 million a year from India and would be willing to increase that figure in response to any tax concessions.

The company is expected to invest in sales, service, charging infrastructure and manufacturing if the customs relief is agreed.

Negotiations come in the wake of Tesla CEO Elon Musk tweeting that the company would like to make cars in India, but its policies are too restrictive and import duties amongst the highest in the world.