Tesla India launch on hold after import duty impasse

Tuhin Guha Updated: May 18, 2022, 12:18 PM IST

After much wrangling with the Indian government over the high import duties on CBUs, Tesla India has put its plans for an India launch on hold on the back of this issue. The Elon Musk-led firm has been lobbying for a cut in import taxes faced by CBUs on the back of its green credentials, but the Indian government has stood by its long-standing policy of promoting local production.

Tesla India launch on hold

The outlet which broke this news says that Tesla India had put in place a February 1 deadline to re-evaluate its India launch plans, to see if the Indian government would bring in a new import tariff structure for EVs with this year's Union Budget. With no change in the policy announced, Tesla has decided to call off the brand's India launch for now. The company has stopped scouting for showroom location it was in the process of doing earlier and has re-assigned the small team it had put in place in India to other roles globally.

Another factor behind this decision has been the current supply shortages plaguing carmakers globally. Like many other firms, Tesla too is having to closely monitor its production and reallocate resources for maximum efficiency.

Tesla India plans

Tesla was quite some way into its India launch plan. The company had picked the Tesla Model Y for an Indian launch, after ruling out the Model 3, and had conducted extensive testing in Indian conditions, even going so far as to set up charging infrastructure to fully execute this. A team for various business aspects was also in place while a launch and delivery timeline was also ready. The company's plan was to import completely-built units from ist production facilities in USA and China, given the nascent stage at which the EV segment is in the country and its product's premium positioning.

The Indian government has been staunch in its stance that for any firm to see any import duty cuts, it will have to set up a local assembly operation. The government cited examples of other firms like Mercedes-Benz and Audi that have made the necessary investments to begin such operations later this year. This seems to have been the right decision, given that the government is looking to grow India's inherent manufacturing abilities in EV production as well as with related components. Currently, the Indian EV industry is heavily dependent on imports. Allowing Tesla, a bit player in the larger scheme of things for the Indian market, import concessions would have been at odds with growing this industry.

Source: Reuters

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