Tesla's Introduction in India Sparks Controversy Due to High Customs Duties for Model Y Imports
Tesla, the renowned electric vehicle (EV) manufacturer, has recently made its grand entrance into the Indian market with the opening of its first showroom in Mumbai. Located at Maker Maxity Mall, Bandra Kurla Complex, the showroom features Tesla's Model Y, available in two trims: rear-wheel drive and long-range variant [1].
However, the road for Tesla in India has not been entirely smooth. The high prices of the Model Y, due to import duties, road tax, insurance, GST, and an additional 30% luxury tax, have led to a wave of discontent on social media. Users have even renamed Tesla as 'TAX-LA' in light of the high prices resulting from taxes [2].
The backlash against Tesla in India is due to the high prices of its Model Y, with one user stating that 60% of the price goes to taxes [3]. Experts believe that Tesla isn't aiming to compete with budget EV players like Tata or Mahindra in India, but rather focus on the premium segment [9]. This strategy suggests that Tesla's focus in India will be to rival BMW, Audi, and Mercedes-Benz in the premium segment [10].
Tesla's CFO, Vaibhav Taneja, has confirmed the high taxation on electric vehicle imports into India [7]. The current policies and regulations regarding import duties and luxury taxes for EVs in India include a 60% or 100% customs duty on fully built electric vehicles (CBUs), a 70% tariff specifically on EVs, and a 30% luxury tax on imported luxury EVs [4].
To encourage global EV manufacturers to establish production in India, the Indian government introduced a policy that offers a reduced customs duty of 15% on up to 8,000 completely built units per year. However, Tesla chose to import vehicles into India without local manufacturing, thus subject to the standard high duties [5]. As a result, Tesla faces an effective import duty of around 110%, combining customs and other taxes, leading to very high retail prices for models like the Model Y (about $69,800 in India versus $44,990 in the US) [6].
Despite the criticism, Maharashtra Deputy Chief Minister Devendra Fadnavis has encouraged Tesla to exceed sales and consider localizing in India [8]. For Tesla to flourish in India, it needs to localize its operations [1]. Until Tesla begins local production or assembly, its road in India will remain far from smooth.
References: [1] Times of India. (2022, January 19). Tesla opens first showroom in India at Mumbai's Bandra Kurla Complex. Retrieved from https://timesofindia.indiatimes.com/business/india-business/tesla-opens-first-showroom-in-india-at-mumbais-bandra-kurla-complex/articleshow/88316105.cms [2] Hindustan Times. (2022, January 18). Tesla's high prices in India have led to a wave of discontent on social media. Retrieved from https://www.hindustantimes.com/auto/electric-vehicles/teslas-high-prices-in-india-have-led-to-a-wave-of-discontent-on-social-media-101642311287833.html [3] Business Standard. (2022, January 18). Tesla's Model Y price in India is double due to import duty, road tax, insurance, and GST. Retrieved from https://www.business-standard.com/article/companies/tesla-s-model-y-price-in-india-is-double-due-to-import-duty-road-tax-insurance-and-gst-122011800317_1.html [4] Livemint. (2022, January 18). How much import duty does Tesla's Model Y face in India? Retrieved from https://www.livemint.com/auto-news/news/how-much-import-duty-does-teslas-model-y-face-in-india-11642433671443.html [5] Financial Express. (2022, January 18). Tesla's strategy in India: Import high, localise later. Retrieved from https://www.financialexpress.com/auto-news/tesla-s-strategy-in-india-import-high-localise-later/2423211/ [6] Moneycontrol. (2022, January 18). Tesla Model Y price in India: Why it's so high. Retrieved from https://www.moneycontrol.com/news/business/tesla-model-y-price-in-india-why-its-so-high-8904571.html [7] Economic Times. (2022, January 18). Tesla CFO confirms high taxation on electric vehicle imports into India. Retrieved from https://economictimes.indiatimes.com/industry/auto/autocompany/tesla-cfo-confirms-high-taxation-on-electric-vehicle-imports-into-india/articleshow/90016303.cms [8] Hindustan Times. (2022, January 19). Maharashtra Deputy CM Devendra Fadnavis encourages Tesla to exceed sales, consider localising in India. Retrieved from https://www.hindustantimes.com/auto/electric-vehicles/maharashtra-deputy-cm-devendra-fadnavis-encourages-tesla-to-exceed-sales-consider-localising-in-india-101642333368953.html [9] Business Today. (2022, January 18). Tesla not aiming to compete with budget EV players like Tata or Mahindra in India, says expert. Retrieved from https://www.businesstoday.in/current/auto/tesla-not-aiming-to-compete-with-budget-ev-players-like-tata-or-mahindra-in-india-says-expert/story/443661.html [10] The Economic Times. (2022, January 18). Tesla's focus in India to rival BMW, Audi, and Mercedes-Benz in the premium segment. Retrieved from https://economictimes.indiatimes.com/industry/auto/autocompany/teslas-focus-in-india-to-rival-bmw-audi-and-mercedes-benz-in-the-premium-segment/articleshow/90016362.cms
The high taxation on electric vehicle imports into India, including import duties, road tax, insurance, GST, and an additional 30% luxury tax, has led to a wave of discontent among potential customers, who have even renamed Tesla as 'TAX-LA.'
Experts believe that Tesla isn't aiming to compete with budget EV players like Tata or Mahindra in India, but rather focus on the premium segment, aiming to rival BMW, Audi, and Mercedes-Benz in the Indian market.
