India is considering cutting taxes on electric car imports

The Indian government is considering cutting taxes from 60% to 40% for imported electric vehicles, and authorities are considering these revised tax rates for electric vehicles under $40,000 including cost, insurance, and freight. For electric vehicles costing more than $40,000, the adjusted tax rate would be 60% - less than 100%.


In July, Tesla founder Elon Musk said he wanted to bring Tesla to India, but the import taxes were too high. Currently, the company does not have any facility in the country to produce its cars, and the company made a formal offer to the government later in the month to cut taxes and submit a proposal to set up manufacturing in India.

While foreign automakers such as Mercedez have appealed for lower tax rates in the past, the Indian government is considering it for the first time after Tesla's appeal. While Tesla and other foreign automakers like Hyundai support the tax cuts, Indian manufacturers like Ola and Tata want local companies to take advantage of these cuts as well.


Car sales in India are around 3 million annually, but electric vehicles are not popular enough to have a negative impact on their overall market share, given that they are generally much more expensive than the range of available ICE models, and the country does not yet have much of the public charging point infrastructure that can talk about.

India has ambitious targets for electric vehicle adoption: it wants 80% of two-wheeled vehicles and 30% of four-wheeled vehicles to be electric by 2030.

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