India Says No To Tesla’s Request For Lower EV Import Duties
In a move that makes it seem as if India is changing its mind on having Tesla expand there, India’s government rejected Tesla’s appeal to lower EV import taxes. The government also seemed to diss Elon Musk’s idea of having a local plant in India after it starts selling EVs imported from overseas. Junior Minister Krishan Pal Gurjar told parliament, “No such proposal is under consideration in Ministry of Heavy Industries.” That particular ministry is in charge of policies for the auto industry and he added that the government is taking steps to promote the use of EVs by lowering domestic taxes and creating better charging infrastructure.
This could be seen as part of a tug-of-war between India Prime Minister Narendra Modi’s administration and Tesla, according to Bloomberg. The prime minister wants a boost in local manufacturing and Tesla wants to be able to import its cars and sell them at a lower price before committing to building a factory. This makes sense — why punish India’s citizens with extreme taxes for an EV? If you want people buy EVs, make them more affordable.
Tesla requested that the import duty on EVs be cut to 40% from its current range of 60–100%. Elon Musk tweeted that a Tesla factory in India would be quite likely if it can start the sales with imported vehicles. He called India one of the world’s most promising automobile markets and pointed out that India’s rules prohibit Tesla from testing the waters due to the high duties making Teslas unaffordable. He also added that clean energy vehicles are treated equally with diesel and gas in terms of taxes and fees, which isn’t at all consistent with India’s goals to cut climate pollution — including a previously stated target of becoming the first 100% electric vehicle nation.
We want to do so, but import duties are the highest in the world by far of any large country!
Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India.
— Elon Musk (@elonmusk) July 23, 2021
WeGoElectric noted that in India, EVs make up less than 1% of car sales. In comparison, in China, BEV market share is at 12% and overall plugin vehicle market share is at 15%. In India, EVs are a pretty hard sell since only 5% of cars sold there are priced around 1.5 million rupees ($20,225 USD). This is amplified by India’s yearly per capita income being only $2,000.
It Makes Sense To Make EVs More Affordable — Especially In Countries With Extreme Pollution
What would India stand to lose by lowering EV import taxes on Tesla? If EVs were more affordable, more would be sold, and that would help bring down some of India’s immense pollution.
In April 2021, Reuters reported that air pollution cost Indian businesses $95 billion per year. Think of all that money being saved by switching to cleantech. Pollution also cuts consumer spending by $22 billion a year, and higher pollution levels knock off $1.3 billion from India’s IT sector. The article noted that if New Delhi doesn’t clean its toxic air, the city’s booming IT sector could lose more than $2.5 billion annually.
The article also noted that India’s capital city, New Delhi, is the world’s most polluted capital and India is home to 35 of the world’s 50 most polluted cities. The pollution is mostly caused by a mix of exhaust from traffic, fossil fuel burning power plants, and heavy industries. In India, there is also a lot of burning of agricultural stubble when farmers want to clear their fields — this often takes place in the fall.
If India was to work with Tesla, Tesla would not only sell cars there but eventually would sell its other services, such as its Powerwalls and Megapacks. Tesla could help India clean its air — if the nation’s government would only allow it to do so.
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