Tesla Likely To Get Govt Clearance By January 2024 For Setting Up Car, Battery Production Facilities In India

India is making every effort to welcome Elon Musk's Tesla, with various government departments striving to provide all the necessary clearances by January 2024.

On Monday (6 November), the Prime Minister's Office convened a meeting of senior officials to review the next phase of electric vehicle (EV) production in the country, which encompasses Tesla's proposed investment.

While the meeting's focus was on broad policy issues, expediting the approval process for Tesla's proposed investment in India by the January 2024 was also discussed.

"Though the agenda of the meeting was centred on general policy matters, fast-tracking approvals by January 2024 to Tesla's proposed investment in the country was spelt out," a top official was quoted as saying by The Economic Times.

Following a meeting between Tesla CEO Elon Musk and Prime Minister Narendra Modi in the US during his official visit in June, key Indian ministries including commerce and industry, heavy industries, and electronics and IT have been actively deliberating on the electric car company's plans for India.

In a significant diplomatic gesture, India has extended an invitation to US President Joe Biden to be the chief guest at the Republic Day celebrations on 26 January.

Top executives from Tesla have engaged in talks with Indian authorities regarding the company's plans for setting up car and battery production plants in the nation.

The electric vehicle manufacturer has shown a keen interest in bringing its supply chain network to Indian soil

"Ministries and government departments have been asked to iron out any differences with Tesla and pave the way for announcing the company's India manufacturing plan at the earliest," a second official was quoted as saying in the ET report.

Tesla had previously sought a 40 per cent import tax on fully assembled electric vehicles, a reduction from the existing 60 per cent duty for cars valued under $40,000 and the 100 per cent on those priced higher.

The Indian customs duty regime currently does not distinguish between electric vehicles and conventional hydrocarbon-fuelled cars, imposing steep tariffs to promote domestic production.

Tesla is advocating for its vehicles to be classified specifically as electric vehicles rather than as luxury automobiles.

The substantial import duties have been a contentious issue in the negotiations between Tesla and the Indian authorities, with the American EV company desiring to initiate car sales in India prior to establishing a manufacturing facility.

"A new category may be introduced in the import policy to ensure that clean energy driven vehicles are taxed lower," said the first official cited, while insisting that this incentive will not be "just for Tesla but for anyone committing to set up electric vehicle manufacturing units."

According to the first official cited in the ET report, there's a possibility of creating a new category in the import policy to allow vehicles powered by clean energy to benefit from lower taxes.

This incentive would not be exclusive to Tesla but available to any entity willing to establish electric vehicle production in the country, the official added.

Tesla had earlier shelved its plans for India due to unsuccessful negotiations regarding a reduction in import duties. New Delhi had maintained that concessions on import duties would be contingent upon a commitment from Tesla to manufacture locally.

Additionally, the Indian government had suggested that Tesla apply for the production-linked incentive programme, which provides direct subsidies to manufacturers, instead of seeking customs duty concessions.