The Union's finance minister, Nirmala Sitharaman, refuted claims that the government is considering a reduction in import tariffs on electric vehicles if automakers partner with local manufacturing units. This clarification follows an earlier Reuters report stating that the central government may be considering a reduction in import duties, possibly as low as 15%, from the current tariffs of 100% for vehicles with more than ₹33 Lakhs in cost and 70% for others.
Speaking to reporters at the B20 summit, Union Finance Minister Nirmala Sitharaman said: "I have no proposal in front of me to reduce import duties on electric vehicles."
This reduction in tariffs could benefit companies such as Tesla, which have expressed interest in entering the Indian market and submitted a proposal to establish a local car factory. An official familiar with the matter was quoted in the report as saying that there appears to be an alignment with Tesla's proposal and that the government is showing interest.
Tesla's concerns about the Indian market are remarkable. Elon Musk, the founder of Tesla, has expressed concerns about the high tariffs in India. After careful consideration, the company started talks about potentially entering the Indian car market. In 2021, Tesla advocated for a reduction in the existing 100% import tax on electric vehicles (EVs) in its efforts to establish a presence in India.
However, the possible agreement between Elon Musk and the Indian authorities did not materialize, as the Indian government stressed the need for a solid commitment to local production as a condition of any arrangement.
Nirmala Sitharaman's clarification tempered expectations of several manufacturers that had risen after the Reuters report. It remains uncertain at this point whether the decision to maintain existing import tax tariffs will affect Tesla's plans to establish its auto plant.