US-based auto major Tesla’s demand for sops for electrical vehicles (EVs) in India, including possible import duty cuts, is still on the table with the Department for Promotion of Industry and Internal Trade (DPIIT) continuing its consultations with other line ministries and the industry on the matter although no “immediate’ announcement is likely, senior officials have said.

Commenting on the government’s recent submission in Parliament stating that presently there was no proposal for extending sops to EVs, the official said that nothing was happening immediately, as stated in the reply, but the matter was still being discussed.

“It is largely known that Tesla is interested in coming to India and is seeking some concessions. There are other companies too that are interested in the EV segment. The DPIIT is engaged in consultations on what can be done to facilitate entry. But no immediate announcement is in the pipeline,” an official close to the development told businessline.

In response to a query on possible sops for EVs in Parliament on December 13, Minister of State for Commerce and Industry Som Parkash said, “Presently, there is no proposal either to provide exemption from local value addition cost or to provide subsidy on import duty on import of electric vehicle in India.”

Giving individual sops to a company, whether Tesla or any another, could be difficult as the government’s policy does not support it, but relaxing rules for EVs in a separate policy for the entire sector was something that could be considered, officials had earlier indicated.

Following a meeting with Prime Minister Narendra Modi during his US visit in June this year, Tesla chief Elon Musk said his company was looking to enter India as soon as “humanly possible”.

Reduction of duties

One of the proposals being reportedly considered by the government is a reduction in import duties on EVs to as low as 15 per cent at least for some years. It could come with a rider of compulsory domestic manufacturing after a fixed period of time. In India, completely built-up (CBU) vehicles priced below $40,000 face an import duty of 70 per cent while those priced above $40,000 face an import duty of 100 per cent.

Domestic car manufacturers, such as Tata Motors and Mahindra & Mahindra, are  opposed to import duty cuts on EVs as they are concerned about losing business. Many companies have committed investments under the PLI scheme for the automotive sector and could lose out if there are import duty cuts, they argue.

EV penetration in the Indian automobile market is quite low with electric cars accounting for just 1.3 per cent of total car sales in the country in 2022, per industry estimates.

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