After Tesla Inc. pleaded with the Indian government to lower taxes and its billionaire CEO, Elon Musk, came up with the idea of a local factory once the company begins the sales of wholly-built units from overseas in the world’s second-most populous country, India said it has no plans to reduce electric vehicle import duties.
“No such plan is under discussion at the Ministry of Heavy Industries,” junior minister Krishan Pal Gurjar told parliament on Monday. He went on to say that the government is taking steps to encourage the usage of electric vehicles by decreasing domestic taxes and expanding charging stations.
The response to parliamentarians might be seen as part of a tug-of-war between Prime Minister Narendra Modi’s administration, which wants to stimulate local manufacturing, and Tesla, which wants India to import cars at a lower level cost before committing to building a factory there.
Last month, Tesla wrote to the transport and industry ministries, requesting that import tariffs on electric cars be cut to 40% from the current range of 60% to 100%.
In the following tweet, Tesla CEO Elon Musk stated that a facility to construct cars in India is “very likely” if the electric automaker can first start selling imported vehicles.
For years, Musk has been declaring his intention to enter one of the world’s most promising automobile markets, but he has also shown his concerns towards India’s restrictions which he claims have prevented him from doing so with imports at first, arguing that high tariffs make Tesla cars “unaffordable.”
Tesla is attempting to break into Asia’s third-largest economy, where electric vehicles account for less than 1% of annual vehicle sales, compared to approximately 5% in China. Unlike China, where Tesla established its first manufacturing outside of the United States and currently dominates electric-car sales, India’s charging infrastructure and high cost have hindered large-scale adoption of electric vehicles.
These barriers have made Maruti Suzuki India Ltd., the country’s largest carmaker that sells every other car on Indian roads, pessimistic about the country’s adoption of electric vehicles.
In the company’s annual report released Monday, Chairman R.C. Bhargava said, “Unfortunately, the technology now available leads to electric automobiles being produced at a cost significantly greater than conventional cars.” “This, along with a lack of charging infrastructure, makes selling electric automobiles to those who can only afford small cars extremely difficult.”
Given that only 5% of cars sold in India are priced above 1.5 million rupees ($20,169), the market penetration of electric vehicles will be “very small,” according to Bhargava, who is the head of the local unit of Suzuki Motor Corp, Japan.
According to him, India’s per capita income is only $2,000, which is only 5% of what it is in Europe and Japan, putting expensive electric cars out of reach for most people.
Such figures have aroused concerns that, even if richer countries aim to phase out combustion-engine vehicles to tackle climate change, global warming will not be maintained below dangerous levels until progress is made in cleaning up poorer countries’ roadways.
The majority of EVs are sold in the United States, China, and Europe, where government-backed incentives and improvements in charging infrastructure make it easier for buyers to ditch their gas cars.
According to Bhargava, Maruti will work on hybrid vehicles, develop technology for cars that run on compressed natural gas, and investigate biofuels to attain net-zero emissions. “Using hydrogen as a fuel is also a viable option that should be studied, particularly to lessen reliance on Lithium imports.”
