Central govt not looking at any tailored incentives as of now for Tesla but states are free to do so; says report

In a recent development, world renowned electric car producer Tesla Inc has regained its interest in setting foot into the Indian market, but the Central government of the country is reportedly too reluctant to offer any special incentives to the carmaker so far. Although, the states are free to handout concessions to boost competition.

Elon Musk's Growing Fortune Drives Tesla Stock to a Four-Month High
Elon Musk’s Growing Fortune Drives Tesla Stock to a Four-Month High

According to some sources, the Centre is not inclined on making specific allocations for the world’s highest-valued carmaker.

With regard to allotment of incentives to the firms, the sources told media publications, “The government is not looking at any tailored incentives as of now. States are a different matter. States might compete with each other and someone might give them (concessions)”.

It has also been found that Tesla is in talks to build a complete supply chain in the long run, something alike to what Apple has done in China in the last few years.

The automaker seems to be following Apple’s footsteps and paving out its path to shift some of its production to the South Asian nation. The move is steered by the tense diplomatic situation between the US and China.

Tesla Inc CEO Elon Musk attends the World Artificial Intelligence Conference (WAIC) in Shanghai, China August 29, 2019. REUTERS/Aly Song/File Photo

Going a little back, Tesla’s liaison came to India last month, to seek a potential way into the market. The automaker’s executives are said to have met various concerned departments, and also with officials from the heavy industries and commerce ministries.

According to government sources, India has made it explicit that it won’t prefer imports, even though the carmaker has been persuading big in terms of whole supply chains running through the country.

In the last few years, Tesla and the Indian government have been at cross with each other since the carmaker asked for a decrease in import duties on EVs in Indian 2021, which the government clearly denied. Tesla CEO Elon Musk also condemned the Indian government last year, over the high import duties on EVs.

He prompted the government to reduce the taxes, which, at present, are in the range of 60%-100% depending on the Cost, Insurance, and Freight (CIF) value of the imported cars.

Announcing that the automaker would not manufacture in any country where it was not allowed to sell or service cars first, the Tesla CEO more or less denounced Tesla’s entry into the Indian market. Musk’s frenzy came soon after the Indian government’s denial to give any special tax reductions to Tesla.

The government was weary that allowing any special tax rebates to the US carmaker could dispirit other foreign as well as local auto manufacturers who are abiding by the current tax slabs.

The Centre also asserted that Tesla should be setting up a local manufacturing plant in India rather than simply importing or assembling completely knocked down (CKD) units. The move did not sit well with Tesla chief but much seems to have changed in the course of time.

Credits: https://en.wikipedia.org/wiki/File:Tesla_logo.pn

Since last month, the Elon Musk-headed Tesla has been showing huge interest in penetrating the Indian market, either through the import market or by setting up a manufacturing plant in India.

As per Minister of State Information Technology, Rajeev Chandrasekhar, during the meeting with Tesla, “India has signalled to the officials that the government is working together and will ‘certainly’ offer facilities to enable them to achieve whatever ambitions Tesla has about India.”

Subsequently, adding up to the plans of setting up a manufacturing unit in India, Elon Musk is also considering procurement of local components. As per a report by Reuters from last month, Tesla also talked of incentives for car and battery manufacturing among others.

At present, the government is looking forward for Tesla to suggest a blueprint for setting up a manufacturing unit in the country.