Govt weighs import tax cuts for EVS
NEW DELHI: The government is considering slashing import duties on electric cars to as low as 40%, two senior government officials told Reuters, days after Tesla Inc’s appeals for a cut polarised the country’s auto industry.
For imported electric vehicles (EVS) with a value of less than $40,000—including the car’s cost, insurance and freight—the government is discussing slashing the tax rate to 40% from 60% presently, the officials told Reuters.
For EVS valued at more than $40,000, it is looking at cutting the rate to 60% from 100%, they said.
“We haven’t firmed up the reduction in duties yet, but there are discussions that are ongoing,” one of the officials said.
Tesla, in its pitch to the government, argued that lowering import duties on EVS to 40% would make them more affordable and boost sales.
This triggered a rare public debate among automakers over whether such a move would contradict India’s push to increase domestic manufacturing.
Even so, the government is in favour of a cut if it can see companies such as Tesla providing some benefit to the domestic economy—manufacture locally, for example, or give a firm timeline on when it would be able to, one of the officials said.
“Reducing import duties is not a problem as not many EVS are imported in the country. But we need some economic gain out of that. We also have to balance the concerns of the domestic players,” the official said.
The second official said that since the duty cut is being considered only for EVS and not other categories of imported cars, it should not be a concern for domestic automakers—that mainly manufacture affordable gasoline-powered cars.
India’s finance and commerce ministries, as well as its federal think tank Niti Aayog, chaired by Prime Minister Narendra Modi, are discussing the proposal and all stakeholders will be consulted, the person added.