India refuses to ‘tailor policies’ to suit Tesla

High import duties have dissuaded the EV maker from launching production in the country

New Delhi will not change the rules for Elon Musk’s Tesla so it can make its long-awaited foray into the Indian market and will instead formulate its policies to attract several global “potential investors,” Commerce and Industry Minister Piyush Goyal told news agency PTI in a recent interview.

Tesla is asking for tariff concessions to offset the customs duty for cars it imports to the country, according to media reports. At present, factoring in cost, insurance, and freight, imported cars valued over $40,000 incur a 100% customs tax, while those under $40,000 face a 70% import duty. Tesla had asked for the concessions as a pre-condition for setting up its first manufacturing unit in India.

”Government does not tailor policy for any one individual company or its interests,” Goyal told PTI when asked about Tesla’s request. “Everybody is free to make their demands. But that does not mean that the government will necessarily take a decision.”

At the same time, he said that the government is working on collaborations with “potential investors” from Europe, the US, the Far East, Japan, and Korea. At present, the Indian EV market is dominated by local giant TATA with four models on the market.

In 2021, Musk complained on X (formerly Twitter) that India’s import duties “are the highest in the world” and stated he was hoping for “temporary tariff relief for electric vehicles.” After meeting with Indian Prime Minister Narendra Modi during his state visit to the US last year, Musk claimed that the Indian leader was “pushing [Tesla] to make significant investments” in the country.

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Last year in November, Modi’s office reportedly held a meeting with senior officials to fast-track Tesla’s entry into the Indian market by providing “all required approvals” by January 2024. Later that month, Goyal visited Tesla’s facility in Fremont, California and said that the company was “on its way to double its components imports from India.”

At the time, Goyal asserted that New Delhi wanted more investment from Tesla and a higher output of EVs in the country soon. “[Having more EVs] will save foreign exchange, reduce our trade deficits, help us in our fight against inflation, thereby helping us in reducing interest rates,” the minister told PTI.

Meanwhile, in its latest budget, the Indian government included an initiative to focus on both manufacturing and charging infrastructure “to fortify and broaden the landscape for electric vehicles” as part of its strategy to hit net-zero carbon emissions by 2070. At present, India has about three million registered EVs on its roads.