According to sources, the logic is that at 40% import duty, electric cars can be more affordable and demand for these can pick up significantly.
A senior government official has informed that America’s leading electric car maker Tesla has demanded a reduction in import duty on electric vehicles in India. Currently, the customs duty on a car imported as a Completely Manufactured Unit (CSU) ranges from 60 per cent to 100 per cent. This is dependent on engine size and cost, insurance and freight value of less than or more than $40,000. “Actually it is a matter of revenue. But their demand for reduction in fee is in the public forum.
Other luxury car makers present in India have also asked to reduce the tax on imported cars but with little success. On the other hand, if we talk about Tesla, then it is going to sell its cars in India by the end of this year. According to the source, the company has said in a letter to the ministry and NITI Aayog that it would be better to have a fully assembled electric car with a federal tax of 40 percent. At present, it is taxed at 60 percent for cars costing less than $40,000 and 100 percent for cars costing more than $40,000.
The price of cars may come down
According to sources, “The argument is that at 40% import duty, electric cars may be more affordable, but the threshold is still high enough to force companies to manufacture locally when demand picks up.” On the other hand, if we talk about Tesla’s vehicles, then the price of only one model Model 3 Standard Range Plus is less than 40 thousand dollars. Let us tell you that there has been no reply by the Niti Aayog and the ministry to Tesla’s letter.
Recently, Union Minister for Road Transport and Highways Nitin Gadkari had said that Tesla has a golden opportunity to set up its manufacturing unit in India, as the emphasis is on e-vehicles in the country. He had said that Tesla is already procuring various vehicle parts from Indian automakers and setting up a base here would be economically viable for them.
Premium electric vehicles are still in their infancy
The Indian market for premium EVs, in fact for electric cars in general, is still in its infancy, with vehicles too expensive for the average consumer and too little space to charge infrastructure. Of the 2.4 million cars sold in India last year, only 5,000 were electric and most cost less than $28,000. Daimler’s Mercedes-Benz began selling its EQC luxury EV in India last year for $136,000, and Audi this week launched three electric SUVs with sticker tags that start at around $133,000.
Whereas the lower fee will give Tesla a better chance to test the market. Tesla registered a local company in India in January and has ramped up local hiring while looking for showroom space.
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