Reduction in import duties for Tesla electric vehicles will make local production unsustainable: SIAM
- Currently, India imposes an effective duty of nearly 110% on imported electric cars costing over $ 40,000 (nearly Rs 30 lakhs).
- US automaker Tesla wants this import duty to be reduced to 40% for electric vehicles imported before it enters India.
- SIAM said such a concession ran counter to the government’s emphasis on local manufacturing and “Atma Nirbhar Bharat”.
New Delhi: The auto industry body, the Society of Indian Automobile Manufacturers Association (SIAM), vehemently opposed a proposal by Tesla for preferential tariff rates for its imported electric cars, saying such a move make local production of electric vehicles unsustainable and set a precedent for others. ask for further concessions on imports, Economic times mentioned in a report.
The industry body made a presentation to the Heavy Industries Ministry last week to make its point. A copy of the presentation was seen by the financial daily.
Currently, India imposes an effective duty of nearly 110% on imported electric cars costing over $ 40,000 (nearly Rs 30 lakhs). US automaker Tesla wants this import duty to be reduced to 40% for electric vehicles imported before it enters India. If the import duty for fully-built units (CBUs) of electric vehicles were reduced to 40%, companies would have little incentive to invest in setting up local assembly units, argued SIAM.
Cars imported in kit form with their key components pre-assembled, called semi-disassembled units (SKDs), are currently subject to a duty rate of 30%.
This import route generates local jobs. While this adds an initial investment and complexity for automakers, they bite the bullet considering the significant savings on import duties. If those tariff savings were reduced to just 10% from almost 80%, automakers might not be willing to invest in localization.
Also, electric cars that will benefit from relief from import duties are aimed at the “ultra-rich” who will benefit from lower prices at a time when the average Indian paid a tax of 28% for two-wheelers. affordable, according to the mentioned publication citing SIAM.
The industry association added that such a concession ran counter to the government’s emphasis on local manufacturing and “Atma Nirbhar Bharat”. “There is a high duty of 10 to 12% on imports of raw materials even like platinum, rhodium, palladium, in order to encourage people to locate production. So why have lower rights on fully built units? Asked an industry executive. There is also another import route called Completely Disassembled Kits where even the key car components are not pre-assembled and which only attracts 10% import duty and is considered the next logical step after. SKD for car manufacturers looking to locate.