New Delhi: Elon Musk, Tesla’s founder and now the world’s richest man replied to a Social Media post and without any surprise it turned controversial. It was not about supporting blockchain technology or the space invasion this time. The controversy started when a random Twitterati asked Musk about further update on Tesla’s launch in India. His reply: “Still working through a lot of challenges with the government.”
Yo @elonmusk any further update as to when Tesla’s will launch in India? They’re pretty awesome and deserve to be in every corner of the world!
Elon Musk @elonmusk Replying to @PPathole and @Tesla. Still working through a lot of challenges with the government.
Tesla India Motors and Energy Private Limited, a subsidiary of American electric car major Tesla Inc, registered for its operations in India on January 8, 2021, in Bengaluru, Karnataka. Union Transport Minister Nitin Gadkari had confirmed Tesla’s entry in India. However, a year later, there is still no sign of Tesla cars in India.
Tesla has complained that “high import duties” imposed by the Government of India on completely built units of foreign automobiles would restrict the sales of its vehicles as well as that of electric vehicles in general.
Musk insists on ‘temporary tariff relief for electric vehicles’ as Tesla continues to lobby hard to reduce the taxes before it officially launches any cars in India. Musk had said that Tesla wants to launch its cars soon in India, but Indian “import duties are the highest in the world by far of any large country”. He had also said that a Tesla “factory in India is quite likely” but at the condition that its imported cars first succeed in the country.
India imposes 100% import duty on fully imported cars with CIF (Cost, Insurance and Freight) value over $40,000, while 60% duty is imposed on cars that cost less than the aforementioned amount.
Gadkari had in April 2021 said that Tesla has a golden opportunity to set up its manufacturing facility in India given the country’s thrust on e-vehicles. Indian government has been urging to manufacture cars in India and discourage imports by relatively high import duty to encourage the make-in-India initiative.
The Union Government wants Tesla to boost local procurement and share a detailed manufacturing plan. Gadkari has in 2021 also asked Tesla to not sell China made models in India.
On September 15, 2021, the Centre approved a production-linked incentive (PLI) scheme for automobile and auto components with a budget of Rs 25,938 crore (US$3.50 billion) to boost domestic manufacturing capacity, including the production of electric and hydrogen fuel cell vehicles.
The PLI scheme for the automotive industry intends to promote higher-tech green manufacturing, and will benefit from the Rs 18100 crore (US$2.42 billion) PLI scheme for advanced chemistry cell manufacturing as well as the Faster Adoption of Manufacturing of Hybrid and Electric Vehicles (FAME) scheme. These schemes are likely to become essential to India’s clean energy goals, enabling the country to transition from fossil fuel-dependencies to an environmentally sustainable and more efficient electric vehicle-based transportation system.
Consequently, it will facilitate India’s commitment towards reducing carbon emissions and oil imports. Which means, Tesla will get assured benefits if the company makes in India.
However, Musk is not interested in producing cars in India before he can start selling and making profits. His intentions are to import CBU (Completely build Unit), fully functional cars at a lower import duty and sell them first to test waters in India.
On the other hand, the government wants Musk to first set up a manufacturing plant and bring Tesla as CKD (Completely knocked down) which means you import the parts and assemble the car in the factory and then sell them in the Indian market. The import duty on CKD is 15%.
It is evident that the Indian government is safeguarding the interest of domestic manufacturers and is encouraging home-grown companies. But Musk wants to play it safe and earn high profits.
He has used Twitter, where he has more than 70 million followers, to apply pressure.
Even some opposition parties from different states have responded and tried to woo Musk to set up shop in their states. These include Navjot Singh Sidhu (Congress) from Punjab, Mohammed Ghulam Rabbani (Trinamool Congress) from West Bengal, Jayant Patil (Nationalist Congress Party) from Maharashtra, and KT Rama Rao (Telangana Rashtra Samithi) of Telangana.
These tactics will only further delay the process and India will have to wait much longer for Telsa cars.