Tesla faces long road to success in India even as New Delhi weighs tax cuts for EVs

The nation has tried to boost the popularity of EVs, with many production-linked incentives in the last two years including tax breaks, cheaper rentals

India’s adoption of EVs remains slow and is hindered by the high cost of cars, a lack of models and charging options

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An EV charging point in Jaipur. India has been trying hard to expand the EV industry. Photo: Shutterstock

Published: 10:30am, 17 Nov 2023Updated: 10:37am, 17 Nov 2023

India appears set to lure Tesla into setting up operations in the country with hefty import duty cuts, a move that could supercharge its EV industry. However, the iconic electric carmaker is likely to face a long road to success in the hugely promising but challenging market, analysts say.

New Delhi levies an import duty of 100 per cent on vehicles that cost more than US$40,000 and most of Tesla’s models are priced higher. The Austin-based firm has been lobbying the Indian government to lower duties for the last two years.

As part of a new policy, the Indian government is reportedly considering allowing international car manufacturers to import battery-powered vehicles at duty rates as low as 15 per cent if they commit to eventually building them in India.

Expectations of a duty cut to smooth Tesla’s entry path rose this week after Indian Commerce Minister Piyush Goyal visited Tesla’s factory in Fremont, California, and posted on social media that he was “proud to see the growing importance of auto component suppliers from India in the Tesla EV supply chain”.

The signs of a breakthrough for the US carmaker came in June when Tesla CEO Elon Musk said the company was looking to invest in India “as soon as humanly possible” following his meeting with Prime Minister Narendra Modi during the leader’s latest visit to the United States.

Tesla’s chief Elon Musk meets Indian Prime Minister Narendra Modi during Modi’s US visit to promote development in the world’s most populous country. Photo: Twitter/Narendra Modi

Puneet Gupta, director of mobility at S&P Global, said any tax cuts were likely to be staggered over three to five years, with the long-term aim of “inviting a few big players to establish a base”.