Tesla is keen to test India’s market for its premium electric vehicles (EVs) with imports before it puts up a plant in the country. As its chief, Elon Musk, tweeted, India’s import duties are the “highest in the world by far of any large country” and “clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India”.
In urging India to drop tariffs, Tesla has reportedly argued that our 100% duty on imported cars valued at over $40,000 and 60% on those below—which would apply to its Model 3—only deter trial launches, while a 40% levy on EVs would entice a soft launch and suffice to encourage local production as volumes pick up. While we do have policy incentives for EVs, Tesla seems unsure if it would be able to sell a sufficient number of cars here and keep costs in India low enough for exports. Even otherwise, its duty proposal should be taken seriously by our policymakers. Lowering barriers may give Chinese EVs an easier way in, too, but new import competition in this segment would push all EV makers here to raise their game, which would suit both buyers and our carbon-control efforts well.
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