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Tata And Mahindra Raise Concerns Over Tesla's Demand For Lower Import Taxes In India

By Outlook Planet Desk December 09, 2023

Tesla demands lower import taxes for electric cars to set up a factory in India as the domestic auto majors, including Tata Motors and Mahindra & Mahindra, urge officials to protect the domestic industry and its investors

Tata And Mahindra Raise Concerns Over Tesla's Demand For Lower Import Taxes In India
Mahindra & Mahindra, another Indian player, raised around $400 million from Singapore's Temasek and British International Investment and raised concerns with officials about the lower EV tax plan. Shutterstock
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The Indian government is considering Tesla's proposal to enter the Indian market. Still, domestic auto manufacturers, particularly Tata Motors, are urging officials to lower import taxes on electric vehicles and protect the domestic industry and its investors.

Tesla proposes setting up a factory in India but demands lower import taxes for electric cars. India is working on a new policy to cut import taxes on EVs to as low as 15 percent for companies committing to some local manufacturing. This approach could allow Tesla to set up its India factory to make its proposed $24,000 car while importing its more expensive models with lower taxes.

Tata has opposed the plan, arguing that its investors made decisions assuming the tax regime favouring locals would remain unchanged. According to sources, Tata believes that India's electric vehicle (EV) industry requires more government support during the early stages of its growth. Tata fears that reducing duties on EVs will negatively impact the entire domestic industry and harm the investment climate.

Mahindra & Mahindra, another Indian player, raised around $400 million from Singapore's Temasek and British International Investment and raised concerns with officials about the lower EV tax plan. India remains determined to make EV sector entry easier for foreign players to help meet its goals. Modi wants 30 percent of annual car sales in India to be electric by 2030, compared to the current 2 percent.

"We will come out with a policy that addresses everyone's fears," said the official, adding that one option was to lower import taxes above a specific price point.

India's talks with Tesla come as other countries are courting the U.S. giant. This week, Thailand's prime minister said he showed Tesla executives around while looking for land, saying he was confident the company would invest in the country.

The Indian government is considering Tesla's proposal to enter the Indian market. Still, domestic auto manufacturers, particularly Tata Motors, are urging officials to lower import taxes on electric vehicles and protect the domestic industry and its investors.

Tesla proposes setting up a factory in India but demands lower import taxes for electric cars. India is working on a new policy to cut import taxes on EVs to as low as 15 percent for companies committing to some local manufacturing. This approach could allow Tesla to set up its India factory to make its proposed $24,000 car while importing its more expensive models with lower taxes.

Tata has opposed the plan, arguing that its investors made decisions assuming the tax regime favouring locals would remain unchanged. According to sources, Tata believes that India's electric vehicle (EV) industry requires more government support during the early stages of its growth. Tata fears that reducing duties on EVs will negatively impact the entire domestic industry and harm the investment climate.

Mahindra & Mahindra, another Indian player, raised around $400 million from Singapore's Temasek and British International Investment and raised concerns with officials about the lower EV tax plan. India remains determined to make EV sector entry easier for foreign players to help meet its goals. Modi wants 30 percent of annual car sales in India to be electric by 2030, compared to the current 2 percent.

"We will come out with a policy that addresses everyone's fears," said the official, adding that one option was to lower import taxes above a specific price point.

India's talks with Tesla come as other countries are courting the U.S. giant. This week, Thailand's prime minister said he showed Tesla executives around while looking for land, saying he was confident the company would invest in the country.

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