Tesla Inc has written to Indian ministries seeking a big reduction in import duties on electric vehicles (EVs), a move it says will boost demand and generate revenue for the government, two sources with knowledge of the matter said.
Its pitch, however, is likely to face resistance from Prime Minister Narendra Modi’s administration which has championed high import taxes for many industries in a bid to boost local manufacturing.
Other luxury automakers in India have also lobbied the government in the past to lower taxes on imported cars but have had little success due to opposition from rivals with domestic operations.
Tesla, which aims to begin sales in India this year, said in a letter to ministries and the country’s leading think-tank Niti Aayog that slashing federal taxes on imports of fully assembled electric cars to 40% would be more appropriate, according to the sources.
That compares with current rates of 60% for cars priced below $40,000 and 100% for those above $40,000.
“The argument is that at 40% import duty, electric cars can become more affordable but the threshold is still high enough to compel companies to manufacture locally if demand picks up,” one of the sources said. The sources declined to be identified as the letter has not been made public.
According to Tesla’s U.S. website, only one model – the Model 3 Standard Range Plus – is priced below $40,000.