India’s automakers are worried about Tesla, so they don’t want officials to reduce import duties

India’s domestic car companies are worried about Tesla entering the market, so they are trying to convince officials not to reduce import duties for the company so it can test demand and potentially enter the market.

Tesla and India have worked for years to come to terms with a Gigafactory where the automaker would build its EVs. It does not import vehicles from other countries into India because of import duties, which can double the price of the vehicle when they are priced at over $40,000.

India has yet to make a decision on reducing import duties for Tesla, according to a new report from Reuters, but companies in the country are now stating that they are concerned about Tesla entering the country.

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India has been developing a new policy that would ease Tesla’s entry into the market and could slash the 100 percent EV tax to as low as 15 percent, making it easier for customers to afford EVs built by the company in other markets.

Tesla is likely to try to bring its vehicles into India at a price point between $24,000 and $36,000 because “that’s where the volumes” will be available, according to India’s Top Bureaucrat in the Department for Industry and Trade Promotion Rajesh Kumar Singh.

Singh told Reuters this at the World Economic Forum, but there is also pushback from Indian automakers who will feel pressure from Tesla because they offer similarly priced EVs.

“It’s a very contested area and we’ve not been able to take a final call on this so far,” Singh said.

No specific car companies were named, but Tata Motors is among two companies that have pushed the government to lower import duties.

The prospective entry into India by Tesla has undoubtedly moved forward over the past few years. At first, Tesla wanted to enter India, but the country was unwilling to move import duties. Things have softened at least slightly, and last year, CEO Elon Musk was more optimistic than ever that a deal could get done.

“I am confident Tesla will be in India, and we’ll do so as soon as humanly possible,” Musk said after a meeting with Indian Prime Minister Narendra Modi. “Hopefully, we’ll be able to announce something in the not-too-distant future. We don’t want to jump the gun on an announcement, but it’s quite likely that there will be a significant investment and relationship in the future.”

Only 82,000 of the 4 million cars sold in India last year were electric. It is certain Tesla’s presence would up the number significantly.

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