India Rejects Elon Musk's Calls For Tax Breaks In Fresh Blow

Prime Minister Narendra Modi's administration has encouraged Tesla to produce locally, while Musk wants India to lower taxes -- as high as 100% on imported EVs -- to enable the company to first sell vehicles built elsewhere at competitive prices.

India turned down a demand of Elon Musk's Tesla Inc. for tax breaks to import electric cars, saying rules already allow bringing in partially-built vehicles and assembling them locally at a lower levy.

"We looked at whether the duties need to be re-jigged, but some domestic production is happening and some investments have come in with the current tariff structure," Vivek Johri, chairman of the Central Board of Indirect Taxes and Customs, said in an interview Thursday. "So, it is clear that this is not a hindrance."

Prime Minister Narendra Modi's administration has encouraged Tesla to produce locally, while Musk wants India to lower taxes -- as high as 100% on imported EVs -- to enable the company to first sell vehicles built elsewhere at competitive prices. However, it levies import duties of between 15-30% on parts shipped for assembly in the nation.

Tesla has yet to present a plan for local manufacturing and procurement from India, even after the government asked for it, Johri said. The federal budget earlier this week didn't mention any tax breaks for cleaner but imported vehicles, even though the western state of Maharashtra -- home to financial capital Mumbai -- publicly backed Tesla's demands.