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India Mulls Tax Reduction on Imported Electric Vehicles to Woo Tesla

The Indian government is actively considering provisions under an emerging EV policy that would allow global car manufacturers to import EVs at concessional duty rates.

November 14, 2023. By News Bureau

In a bid to attract global electric vehicle (EV) manufacturers, India is reportedly contemplating a significant tax reduction on the imports of fully assembled electric vehicles for up to five years. This move is particularly aimed at companies like Tesla Inc.

The Indian government is actively considering provisions under an emerging EV policy that would allow global car manufacturers to import EVs at concessional duty rates. However, this benefit would come with a condition: a commitment to eventually set up manufacturing facilities in India.

In 2021, Tesla, the Austin-based electric vehicle manufacturer, sought reductions in import duties for electric vehicles. Specifically, the company aimed to lower the rates from the existing 70 percent - 100 percent range to 40 percent, contingent on the import value of its vehicles.

Elon Musk, the CEO of Tesla, is expected to meet with India's Trade Minister Piyush Goyal later this week to discuss the company's intentions to establish a manufacturing facility in India.

Tesla's interest in the Indian market is driven by the growing demand for electric vehicles within the country's expanding middle class. If Tesla proceeds with its investment, it would contribute to the Indian government's objectives of boosting manufacturing in the nation's GDP and generating employment opportunities.

The potential expansion of the electric vehicle segment can accelerate the uptake of environmentally friendly transportation in a nation grappling with the world's most polluted air.

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