Tesla’s potential entry into the Indian market appears to be taking a step forward. As per a recent report, India is reportedly considering a policy that would reduce import taxes for automakers that are willing to produce some of their vehicles in the country. The policy reportedly comes after a proposal from Tesla.
Tesla has long tried to enter the Indian market, but the company has repeatedly been foiled by the country’s import taxes, which currently stand at 100% for vehicles that cost over $40,000. Tesla’s Model Y crossover, its best-selling vehicle, starts at $47,740 in the United States before tax credits.
As per a Reuters report, the updated policy being considered by India would allow automakers to import fully-built cars at a reduced tax rate as low as 15%. Citing an individual reportedly familiar with the matter, the publication noted that the government is showing some interest in Tesla’s proposal. However, the policy is reportedly in its initial stages of deliberation, and thus, the adjusted tax rate could still change.
“There is an understanding with Tesla’s proposal, and (the) government is showing interest,” the official noted. Another source cited by the publication stated that the lower import taxes could aid Tesla in selling its entire lineup of vehicles in India, not just the company’s most popular cars. For context, Tesla is reportedly considering the production of a low-cost electric vehicle in India that would be priced at around $24,000.
While the news is exciting, an official also noted that the government might not move very quickly. This is because any adjustments to the country’s import taxes may risk the disruption of India’s auto market. It may potentially even put domestic automotive players like Tata and Mahindra at risk.
“This is going to go through a lot of deliberations even though (the) government is keen on getting Tesla. That’s because of the impact on domestic players,” the official noted.
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