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India looks to provide all approvals to Elon Musk’s Tesla by January 2024

Synopsis

The PMO on Monday held a meeting with top officials to discuss about the next phase of electric vehicle (EV) manufacturing in the country, including Tesla’s investment proposal, ET was informed by people with knowledge of the matter.

Indian government looks really serious about getting Elon Musk’s Tesla to the country at the earliest and its departments are trying to provide all the required approvals by January 2024. “Though the agenda of the meeting was centred on general policy matters, fast-tracking approvals by January 2024 to Tesla’s proposed investment in the country was spelt out,” a top official informed.

The ministries of electronics and IT, commerce and industry, and heavy industry have been giving due attention to the electric carmaker’s plans after Tesla CEO Elon Musk got the opportunity to meet PM Narendra Modi in the US during his state visit in June. Notably, India has invited US President (Joe Biden) to be the chief guest for the Republic Day 2024 celebrations.

Senior Tesla executives have held deliberations with the government to set up car and battery manufacturing facilities in India. The EV maker has conveyed interest in bringing its supply chain ecosystem to India. “Ministries and government departments have been asked to iron out any differences with Tesla and pave the way for announcing the company’s India manufacturing plan at the earliest,” another official said.

Tesla had earlier demanded a cut in import duty to 40% on fully assembled electric cars from current rate of 60% applicable on vehicles priced under $40,000 and 100% on those retailed above that. India’s customs duty regime makes no distinction between electric cars and those that run on hydrocarbons and levies high duties to encourage local manufacturing. Tesla wants its cars to be treated as EVs and not luxury cars.

The high duty has been a point of contention between Tesla and GOI with the US-based EV maker desiring to sell some cars in the country first before setting up a manufacturing unit. “A new category may be introduced in the import policy to ensure that clean energy driven vehicles are taxed lower,” stated the first official cited, while making it amply clear that this incentive will not be “just for Tesla but for anyone committing to set up electric vehicle manufacturing units”. Point to be noted here is that Tesla had dropped its earlier India plans due to failure to get import duty reduced.

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