India Will Not Give Tesla Any Tax Breaks

Any special concessions and tax breaks for the world’s most valuable carmaker and electric car pioneer Tesla have been ruled out by the Indian government. In a report by ETAuto, it has been revealed that the government’s plans for local manufacturing have received an overwhelming response that could generate revenues of over Rs 2.3 lakh crore. Arun Goel, the heavy industries secretary, has revealed companies who have submitted proposals for localization have committed investments in India that go beyond the government’s projections.

“We have received fresh investment proposals beyond the targeted INR 42,500 crore. The response has been overwhelming and the larger industry has been appreciative of our plan, which explains the robust investment commitment,” Goel said.

But when asked about potential concessions to facilitate the entry of Tesla in India, he ruled out that possibility. “The concession plan is uniform (for the industry). We are a democracy,” he added.

Transport minister Nitin Gadkari had also expressed concerns around Tesla’s proposed entry into India where it would start by selling imported vehicles made in its Shanghai Gigafactory.

“The company (Tesla) wants workers from China and the market of India. This is not possible under the Modi government. Our government’s policy is that if the Indian market has to be used, job opportunities will also have to be given to Indians,” said Minister of State for heavy industries Krishan Pal Gujjar in the Lok Sabha opposing Tesla’s plans for entering India.

Tesla’s predicament in India is a tricky one – it wants to leverage what will be the third-largest automobile market in the world, but its products aren’t viable for the market. Its cheapest models are vastly more expensive than the cost of the average sedan, which in turn is further hobbled by a potential 100 percent tax duty. Then there is the lack of local charging infrastructure which has been Tesla’s secret sauce.

India doesn’t want to give Tesla tax breaks for numerous reasons. It has already secured investments from automotive giants like Hyundai and Mercedes who are making their top-tier EVs in India. It will need to extend the tax breaks to every car maker if exceptions were made for Tesla.

Then there is the issue of Tesla likely importing its cars from China, a country with which India has had strained relations. On top of this, Prime Minister Narendra Modi’s government has championed localized manufacturing with its “Make in India” scheme so Tesla’s plans are at odds with what the Indian government wants.