Tesla writes to Indian govt seeking drastic reduction in import taxes for luxury electrics cars: Report

The suggestion is not likely to appeal with the Modi government, which supports high import duties for many industries to boost domestic manufacturing under its "Make in India" initiative.

Reuters reported citing sources that Tesla wrote to ministries in the Narendra Modi government, including  transport and heavy industries ministries, as well as government think tank Niti Aayog making the pitch that cutting down import tax on fully assembled electric cars to 40 per cent would be more appropriate.

Currently, the tax rate is 60 per cent for cars priced below $40,000 and 100 per cent for cars priced above $40,000.

Earlier, other luxury car makers had also lobbied for reduction in import duties but opposition from rivals with domestic operations prevented any success. 

Tesla has reasoned that 40 per cent import duty will make the car more affordable but the threshold will be still high enough to compel the manufacturers manufacture locally if demands grow.

The report noted that Indian market is still in its infancy for premium electric cars and the infrastructure to support such vehicles is not enough. This is reflected from the sales figure which was just 5,000 of the 2.4 million cars sold in India and most were priced below $28,000.

According to Tesla’s U.S. website, only one model - the Model 3 Standard Range Plus - is priced below $40,000.

However, Tesla's plan to begin sales in India doesn't depend on a change in government policy, but it may allow the American manufacturer a better chance to test the market, the report stated citing the sources.

Tesla has registered an Indian unit to start its operations in the country and started recruitment of top officials for running the business in India while also deciding on showroom space.