Gadkari to Tesla: Don't sell China made electric cars in India, says EV manufactured by Tata Motors are no less

Union minister Nitin Gadkari on Friday said he has asked US-based Tesla several times to manufacture its iconic electric vehicles in India, while assuring that all support will be provided by the government to the company.

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Addressing 'India Today Conclave 2021', Gadkari further said electric cars manufactured by Tata Motors are not less good than electric cars manufactured by Tesla.

"I have told Tesla that don't sell electric cars in India which your company has manufactured in China. You should manufacture electric cars in India, and also export cars from India," he said. Tesla has demanded reduction in import duties on electric vehicles (EVs) in India.

"Whatever support you (Tesla) want, will be provided by our government," Gadkari added.

The road transport and highways minister said that he is still in dialogue with Tesla officials regarding the company's demand related to tax concessions.

Last month, the heavy industries ministry had also asked Tesla to first start manufacturing its iconic electric vehicles in India before any tax concessions can be considered.

At present, cars imported as completely built units (CBUs) attract customs duty ranging from 60-100 per cent, depending on engine size and cost, insurance and freight (CIF) value less or above USD 40,000.

In a letter to the road ministry, the US firm had stated that the effective import tariff of 110 per cent on vehicles with customs value above USD 40,000 is "prohibitive" to zero-emission vehicles. It has requested the government to standardize the tariff on electric cars to 40 per cent irrespective of the customs value, and withdraw the social welfare surcharge of 10 per cent on electric cars. It has stated that these changes would boost the development of the Indian EV ecosystem and the company will make significant direct investments in sales, service, and charging infrastructure; and significantly increase procurement from India for its global operations.

The company has argued that these proposals would not have any negative impact on the Indian automotive market as no Indian OEM currently produces a car (EV or ICE) with ex-factory price above USD 40,000 and only 1-2 per cent of cars sold in India (EV or ICE) have ex-factory/customs value above USD 40,000. Recently, Gadkari had said Tesla has a golden opportunity to set up its manufacturing facility in India given the country's thrust on e-vehicles.

Tesla is already sourcing various auto components from Indian automakers and setting up base here would be economically viable for it, he had said.