Niti Aayog woos Tesla by offering tax breaks

Niti Aayog Vice Chairman Rajiv Kumar has pushed Tesla to build its electric vehicles in India while assuring the business that it will receive the tax breaks it seeks from the government, according to a report in the Business Standard. At a virtual conference hosted by the Public Affairs Forum of India (PAFI), Kumar stated that Tesla should not just ship its products to India because this will not result in the creation of jobs in the nation.

The Business Standard quoted Kumar as saying that he was asking Tesla to come and manufacture cars in India as the government was ready to offer tax benefits.

Road Transport Minister Nitin Gadkari had said earlier this month that he has urged Tesla multiple times to manufacture its electric vehicles in India, and that the government will give the firm with all the necessary support.

Tesla Cars In India

Last month, the heavy industries ministry had requested that Tesla begin producing its automobiles in India before considering any tax breaks.

Currently, cars imported as Completely Built Units (CBUs) are subject to customs duties ranging from 60% to 100%, depending on the engine size and cost, as well as the value of insurance and freight (CIF) less than or greater than $40,000.

The Elon Musk-led company argued in a letter to the road ministry that the effective import tariff of 110% on vehicles with a customs value of more than $40,000 is “prohibitive” for zero-emission vehicles.

It has asked the government to lower the tariff on electric automobiles to 40%, regardless of the customs value, and to eliminate the 10% social welfare fee on electric cars.

It claims that these improvements would help the Indian EV ecosystem grow, and that the business will invest heavily in sales, service, and charging infrastructure, as well as dramatically increase procurement from India for its global operations.