Elon Musk replied to a tweet on Thursday saying, “Still working through a lot of challenges with the government.”
While the billionaire CEO did not point out the “challenges” on his Twitter post, the high duty of 100% on EVs and imported cars could be one of the reasons.
Why is Tesla facing challenges with the Indian Government to launch EVs?
The high duty on EVs and imported vehicles led to only 2.4 million Tesla cars sales in India. Only 5000 cars were EVs, and a handful were luxury models. The high taxes will inadvertently cause a hike in EV prices, making sales even more difficult.
Since last year, Tesla has struggled with the Indian Government to slash import taxes. Elon Musk said the Indian import taxes are among the highest globally.
Various companies who have invested billions of dollars in India have raised objections to duty benefits for Tesla.
Elon Musk asks the Indian Government to slash high import taxes
The heavy industries ministry has asked Tesla to manufacture the cars locally before expecting any duty benefits. Nevertheless, in light of a budget-conscious economy, Tesla’s CEO has demanded lower import taxes.
In Tesla’s struggle with the Indian Government, it has requested the tariff on EVs to reduce to 40% from 110%. They also asked the Government to waive the 10% social welfare surcharge on EVs.
They pointed out that these cuts would speed up the Indian EV ecosystem and an unprecedented direct investment in charging infrastructure, sales, and service.
However, Tesla registered itself as an unlisted private entity as Tesla India Motors and Energy Pvt. Ltd. with Registrar of Companies Bangalore.
Indian Governments response to Tesla’s import tax requests
At the Public Affairs Forum of India conference, Road Transport Minister Nitin Gadkari said, “Come and manufacture in India, you (Tesla) will get all the tax benefits you want. The argument that we will create a market by exporting into India finished products is an old argument and we have moved on from that.”
Nitin Aayog’s Vice Chairman Rajiv Kumar has encouraged the manufacturing of Tesla EVs in India. While he assures Tesla of tax benefits from the Government, he urges the company not to import products into the country, hampering the job market.
Nitin Gadkari has also actively supported Tesla manufacturing EVs in India, ensuring that the Indian Government fully supports the company.
What is next for Tesla in the Indian market?
Along with Tesla, Elon Musk’s SpaceX and Starlink are also struggling with the Indian Government.
Elon Musk’s Starlink internet service refunded pre-order deposits to Indian customers as directed by an order. The order came as Indian lawmakers say the internet provider does not possess a licence to operate in India.
While the Indian EV market is still early, the Indian Government strives to achieve a 65% sales increase in EVs by 2030.
With India now the world’s fifth-largest auto market, it presents massive growth opportunities for carmakers.