Tata Motors, M&M raise concerns with government on plans for import tax cut on electric vehicles: Report

Tata Motors and Mahindra & Mahindra have raised concerns with the government on plans for lower import tax for electric vehicles, Reuters reported today, citing people familiar with the knowledge. 

Recently, there have been reports that the government is working on a new electric vehicle policy that would cut import tax for automakers that commit to some local manufacturing, following Tesla’s proposal to set up a manufacturing facility in India, the newswire said. 

The government is reportedly considering allowing automakers to import fully-built electric vehicles in India at a reduced tax of as low as 15% for cars that cost more than $40,000, and 70% for the rest from the current 100%. 

The Reuters report noted that Tata Motors held meetings with Prime Minister’s office and other departments, and opposed plans for a lower import tax. It further noted that Tata has opposed the plan, arguing that its investors made decisions assuming the tax regime favoring locals will remain unchanged. 

Earlier talks between Tesla and the Indian government stalled after the government asked the automaker to commit to domestic manufacturing before reducing tariffs. However, after Elon Musk met with Prime Minister Narendra Modi earlier this year, Musk expressed Tesla’s intentions to establish in India, reopening the stalled negotiations. 

Currently, electric vehicle penetration in India is only at around 2%. The government is targeting the penetration to reach around 30% by the end of the decade. Tata Motors is the market leader in India’s electric car space. 

The government is trying to soothe the concerns of local automakers, but India remains determined to make it easier for foreign players to enter the electric vehicle market to meet the transition goals, Reuters reported. 

Apart from India, other countries, including Thailand, are also trying to attract investment from Tesla.