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Tesla urges a slash in import duty, plans to enter India with imported cars: Sources

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According to sources, Tesla has urged Indian Prime Minister Narendra Modi’s office to slash import taxes on electric vehicles as it plans enter the market. The move has faced objections from some Indian automakers.

Tesla wants to begin selling imported cars in India this year but says taxes in the country are among the highest in the world. Its request for tax cuts has prompted objections from several local players, according to whom doing such would deter investment in domestic manufacturing.

In a closed door meeting, Tesla executives, including its head of policy in India, Manuj Khurana, took the company’s demands to Modi’s officials last month arguing that the taxes are too high, sources familiar with the discussions said.

During the meeting at Modi’s office, Tesla said that India’s duty structure would not make its business in the country a “viable proposition”.

India at present imposes an import duty of 60% on electric vehicles that cost $40,000 or less, and 100% duty on those priced over $40,000. At these rates, according to analysts, Tesla cars would become far too costly for buyers and could limit their sales.

Tesla has also put in a request for a separately meeting between its Chief Executive Elon Musk and Modi.

It is not however clear what the Prime Minister’s office specifically told Tesla in response, but four sources told Reuters that the government officials are divided over the U.S. automaker’s demands. Some officials want the company to commit to local manufacturing before considering any import tax breaks.

Local auto manufacturers are concerned about the impact it will have on the industry if the government relents to Tesla’s demands. Indian companies such as Tata Motors, which recently raised $1 billion from investors to boost EV production locally, has said giving Tesla concessions would be contrary to India’s plans to boost domestic EV manufacturing.

The transport minister said this month Tesla should not sell made-in-China cars in India and should manufacture locally instead, but Tesla has indicated it first wants to experiment with imports.

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