On Monday, the Union road transport and highways minister, Nitin Gadkari stated that the US based luxury automaker, Tesla will benefit if it set up the production of electric cars in India, not in China. This was addressed at the interactive session of the event, Raisina Dialogue 2022, where he did not disclose details on getting what kinds of benefits but remarked that the country stands no far when the expense of electric vehicles will less than the petrol vehicles in the nation.
Nitin Gadkari commented, “Agar Tesla India me electric car manufacture Karega toh unka bhi fayda hoga (If Tesla manufactures its electric vehicles in India then they will also get benefits),”. Also, he added, “If Elon Musk (Tesla CEO) is ready to manufacture in India then there is no problem … Come to India, start manufacturing, India is a large market, they can export from India,”.
Tesla to Benefit if They Set Up Production in India
Earlier on April 26, Nitin Gadkari has already stated that the US firm has to manufacture its products in India, not in China if wants to come and sell in India. Otherwise, if the production happens in China and exports in India, it would not be a good proposition for India. India is a huge market space where the automaker can export from India, where Tesla can secure fair export opportunities.
Other than the stubbornness in the matter of production, India has no other problems to invite this all-time prominent manufacturing firm to roll out its cars on the roads of India. If Tesla lets on this decision and comes to India, the company will also get to experience decent vendor availability and all kinds of cutting-edge technological setups.
The heavy industries ministry has already invited Tesla to come to India and to commence the production of its supreme models to deal with any tax concessions. At that time, the dispute on the matter of customs duty made the US-based automaker abscond their entry to India. At present, these cars are imported as Completely Built Units (CBUs) and India charges 100% tax of heavy customs duty on the vehicles that hold a price tag of more than $40,000 (30.51 lakh) that comprises insurance, freight cost (CIF value) and for the vehicles less than $40,000, 60% of import duties will be imposed, in which these estimations will vary depending on the engine size and the price tag of vehicles.
As a result of this proposal, Tesla sent a letter to the road ministry on the demand to cut down the custom duties last year. The company explained that this import charge of 110% on vehicles with a customs cost of USD $40,000 is exorbitant for zero-emission vehicles. If we are considering the case of the Tesla Model 3 with a price tag of $40,000 will not at all be a problem in the US as it is affordable there.
However, in the case of India, the inclusion of import duties will round off to a cost of 60 lakh, which would be highly expensive than ever. This is what he recently tweeted, the company desires to launch its cars in India, but the import tariffs are the highest in the world. Tesla has even requested the Indian government to normalize the import duties on electric cars to 40% and to exclude the social welfare surcharge of 10% irrespective of custom duties.
However, Gadkari responded that the country is not able to pacify one automobile company. Hence, Elon Musk posted on Twitter, “Tesla isn’t in India yet due to “Challenges with the government”.
If India is ready to agree with these demands, Tesla will proceed with the direct investment in sales, service, charging infrastructure, and effective acquisition from the nation for its global ventures. The company also comes with the point that, the entrant of Tesla will not only back up the growth of the Indian Ev ecosystem but also provides no negative impacts on the industry.
Because there is no Indian original equipment automobile manufacturing company that builds electric or internal combustion engine cars with ex-factory cost more than USD 40,000 and there is only 1 to 2% of cars that hold ex-factory or customs duties above USD 40,000.