India is contemplating a reduction in taxes for imported fully assembled electric vehicles for a duration of up to five years. This move is aimed at attracting companies like Tesla Inc. (NASDAQ:TSLA) to market and, in the future, manufacture their electric cars within the country.
According to a Bloomberg report, citing unnamed sources, the Indian government is actively formulating an EV policy that would grant international car manufacturers the opportunity to import battery-powered vehicles at preferential duty rates. This privilege would be contingent on their commitment to eventual local production in India.
The specifics of the policy are still under consideration, and a final decision has not been reached. The information comes from individuals close to the discussions who preferred to remain anonymous as the talks are currently confidential.
In 2021, Tesla had requested reductions in import duties for electric vehicles. The company aimed to lower the rates from the existing 70%-100% range to 40%, depending on the import value of its vehicles.
Tesla CEO, Elon Musk is expected to meet with Indian Trade Minister Piyush Goyal later this week to discuss the company's plans to establish a factory in India. Minister Goyal is currently in San Francisco for ministerial engagements related to the Indo-Pacific Economic Framework and the Asia-Pacific Economic Cooperation.
Tesla is keen on entering one of the world's most promising automotive markets, where there is a growing demand for electric vehicles among the expanding middle class. The investment from Tesla would align with the Indian government's objectives of boosting manufacturing's contribution to the nation's GDP and creating employment opportunities.
Shares of TSLA are up 0.81% in pre-market trading on Monday.