Mercedes seeks tax breaks for electric vehicle makers in India
MUMBAI: India’s largest luxury car maker Mercedes-benz India Pvt. Ltd has called for tax breaks for the automobile industry to build a sustainable business model for electric vehicles in the country.
In an interview, managing director and chief executive Roland Folger said his company would like to manufacture electric vehicles in India once it crosses sales of more than 400 such units a year in India. Mercedes boasts of being India’s only luxury vehicle maker with more than 60% localisation.
A critic of the present government’s “arbitrary” tax policy on the luxury segment, Folger also called for tax breaks on EVS imported through the CBU (completely built unit) route to make for a “sustainable business case”.
“We need to wait for government policy to see how the pricing of our EVS works out. The government should consider tax breaks to CBUS for one to two years,” Folger said.
If the maker of the E-class sedan chooses to import EVS into the country, the cars will belong to the parent Mercedesbenz’s EQ brand, which was unveiled at the Paris Motor Show in October 2016. The German company is also waiting for a stable government stance on taxation of hybrid vehicles “though plug-in hybrids are a meaningful alternative to EVS”.
However, an analyst said it would be futile to expect tax breaks given the low commercial viability of luxury EVS at the moment.
“Luxury EVS are like fighter aircraft; India can’t make them and importing them is very costly. The EV technology is difficult for a country like India to accept, so it does not make sense for a government to subsidise a product which won’t see much demand in the first place”, said Deepesh Rathore, co-founder and director at London-based consulting firm Emerging Markets Automotive Advisors.
Meanwhile, Folger admitted that sales for 2017 “did not see a negative surprise though they could have been better if not for the cess hike in September”.
From January to September this year, Mercedes-benz India sold 11,869 units, a 19.59% jump over the corresponding period in 2016.