Elon Musk, Tesla co-founder and chief executive, announced that his California-based electric vehicle (EV) and clean energy will enter the Indian market in 2021. India’s restrictive taxes on vehicle imports was earlier criticized by the serial entrepreneur and multi-billionaire. This is not the first time he has shown interest in setting foot in the subcontinent. Musk had also tweeted last year that India’s high duties on vehicles which is imported as completely built units (CBUs) mired the company’s entry in Indian market. Company’s decision was also influenced by low per capita income and lack of infrastructure for EVs.
EVs imported as CBUs currently attract a 40% duty. For those imported semi-knocked down units (SKDs), duty is 30%. For completely knocked down units (CKDs), import duty is 15%. Also, the GST on such vehicles has been cut to 5% from 12%. It also helps to attract foreign investment in EV technology. EVs is one of the prime agendas for developing India as comprehensive hub led by Prime Minister Narendra Modi. Five years ago, Modi had visited tesla’s factory in Fremont, California.
According to some industry executives, Tesla’s venture could be in the form of confined research & development (R&D) units in place of selling electric cars as CBUs or establishing an assembly unit for EVs. To build an R&D centre in Bengaluru, Tesla is in talks with the Karnataka Government. To promote manufacturing and exports of lithium-ion cells from India, the government is also working on a separate scheme. Also, to develop India’s own EV battery manufacturing ecosystem as well as Giga factories for lithium-ion batteries, NITI Aayog, the Union government’s policy think tank is working with a number of ministries.
To encourage the development, manufacturing and adoption of EVs through the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, the central government had last year assigned ₹10,000 crore.