October 9, 2021 10:16 AM
Tesla car will be “affordable” when it is launched in India, and it will cost Rs 35 lakh here, said Union Minister for Road Transport & Highways Nitin Gadkari on Friday. His remarks were further indication of the Indian government and the Elon Musk-run firm’s mutual interest in having Tesla cruise into the world’s fifth-largest automobile market, which has a reputation of being price sensitive.
Tesla has been in talks with the government and has been invited to make its cars in India, Gadkari said. He was speaking at the Game Changers: Climate Action session at the India Today Conclave 2021. The minister’s remarks come 10 months after he announced the entry of the world’s most valuable brand into India.
Though there has been no formal announcement by the company on its India plans yet, it is widely anticipated that the car manufacturer will bring the more affordable Tesla Model 3 with a starting price range of Rs 55 lakh to Rs 60 lakh.
Gadkari also said that he has communicated to the Tesla officials to not launch a “made in China car” to India. “I asked Tesla officials not to make the car in China and sell it in India. It is something I had in my mind and I told them,” he said. “Come to India, make it here, sell it here, and export from here. The government will provide you all the help and support you need,” he added.
According to Ravi Bhatia, president and director at JATO Dynamics India, an automotive business intelligence company, the remarks by the minister show that “there is a signalling going on between the government and Tesla. It appears that there is a mutual interest.”
Tesla would have studied the Indian market and would be well aware that to garner reasonable volumes in the country, its cars have to be priced competitively. The market for cars in India priced above Rs 50 lakh is very small, Bhatia said, adding that it is also the first time that a senior government representative has made the anti-China sentiment public.
Tesla has been lobbying with the Indian government to reduce the duty on imported cars. India levies an import duty of 100 per cent on imported cars if the CIF (cost, insurance and freight) value exceeds $40,000 or has a petrol or diesel engine with a displacement of greater than 3,000 cc and 2,500 cc, respectively.
For cars that have a CIF value of less than $40,000, the duty is 60 per cent. Tesla’s electric vehicle (EV), which the company plans to start selling in India from this year, will have a CIF exceeding $40,000 and will, therefore, attract a 100 per cent duty. The firm is seeking a duty cut of 60 per cent for this category.
Several government agencies, including the road transport ministry, Department for Promotion of Industry and Internal Trade as also NITI Aayog, have supported Tesla’s proposal for reduction in import duty, and the finance ministry may soon take a final call on this, the Times of India reported in August.
There has, however, been no official announcement from the government on the matter yet.