Back on Friday, a Tesla fan asked on Twitter for an update on Tesla’s plant in India. Musk promptly responded: “Tesla will only consider building a manufacturing plant in India if it’s first allowed to sell and service cars”.
For more than two years, Tesla and the Indian government have been in talks to enter the Indian market. On the one hand, the Indian government insists that Tesla first build a factory in the country to assemble cars locally. If Tesla just wanted to sell cars in the Indian market, it would need to pay high import taxes. Currently, the Indian government requires a 100 percent import tax on imported cars with a cost, insurance, and freight (CIF) value of more than $40,000. There is also a 60 percent import tax on cars with a CIF value below that amount. Meanwhile, the Indian government has refused to offer Tesla any tax rebates.
India refuses to give Tesla tax breaks, Tesla won’t build a manufacturing plant unless it has sure of Tesla vehicle’s success in the country
The Indian government is concerned about giving Tesla any tax breaks. The move may discourage other automakers that abide by the current tax system. In addition to that, the tax rebate could hit India’s domestic EV industry. Tesla, on the other hand, is trying to negotiate lower tariffs with India. Therefore, it can test the market reaction by selling cheaper imported electric cars. It’s a natural and safe move before it proceeds in building a super-expensive manufacturing base. Worth noting, that the Indian government will also benefit from a possible local factory. After all, it will generate millions of jobs and will further strengthen the local EV industry.
The stance of the central government in India is tough. However, many states have been opening olive branches to Musk. Back in January, ministers from the Indian states of Telangana, Punjab, Bengal, and Maharashtra invited him to invest in their respective states. Tesla set up a subsidiary in India in early 2021. The company has registered an office in the city of Bangalore in the Southern Indian state of Karnataka. The region confirms Tesla’s plans of building an electric vehicle manufacturing plant in the state. However, both plans are currently at a standstill.
Elon Musk also faces problems with SpaceX establishment in the country
According to Elon Musk, Tesla is still “working with the Indian government on many challenges”. Interestingly, Audi has expressed similar concerns before. Worth noting that Toyota, Mercedes-Benz, BMW, and Hyundai are some of the popular carmakers that recently expanded their presence in India.
Apparently, there is not much hope for a quick solution. That explains why several Tesla executives in India are reportedly being reassigned to focus on Indonesia and other Asian markets.
Worth noting, that Elon Musk’s problems with India also involve its rocket company SpaceX. The company is awaiting approval from the Indian government to deploy the Starlink satellite internet service in the country. The company plans to deploy 160,000 to 200,000 satellite dishes in India by the end of December 2022. However, Indian regulators recently ordered SpaceX to stop taking orders from Indian users because it has not yet obtained a license to operate in the country.