Import duty sops unlikely for Tesla

India is unlikely to provide any import duty concession to Elon Musk's Tesla unless the company considers local investment, people aware of the latest developments told ET.

Tesla officials have reached out to various government departments, reviving plans for India. "They (Tesla) have approached us," an official of heavy industries ministry said.

Tesla has been eyeing the Indian market to sell its popular electric cars.


The company had sought a 40% import duty on fully assembled electric cars against the current rate of 60% applicable on those priced below $40,000 and 100% on those retailed above that.

The company wants its cars to be treated as electric vehicles, and not luxury cars.

India's present customs duty regime does not differentiate between electric cars and those that run on hydrocarbons, and imposes high duties to encourage local manufacturing.

Prime Minister Narendra Modi has identified clean energy and EVs as one of the key focus areas and these are being encouraged through several incentives.

Tesla dropped its India plans after failing to make headway in talks over import duty reduction. New Delhi had insisted on a commitment to local manufacturing in lieu of any import duty concession. The government had also asked the company to apply for the production-linked incentive scheme that offers direct subsidies to manufacturers.

Responding to a query on any possible relaxation for Tesla, the official said, "We are not contemplating any duty cut. We are in talks with several other countries as well, free trade agreements are being negotiated with the United Kingdom. Talks are also on with Germany. But no duty cuts are being considered."

According to official data, there has been a foreign direct investment (FDI) inflow of $33.77 billion in the industry from April 2000 till September 2022 which is around 5.48% of the total FDI inflows during the period.

Officials said that existing benefits available to the automobile sector can be availed by Tesla, too.