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Tesla begins formal talks with govt

By Nitin Kumar
April 19, 2024 20:20 IST
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In its first official engagement with the Indian government, Elon Musk-led Tesla and other global automotive (auto) manufacturers sought clarification on the new electric vehicle (EV) policy, specifically regarding investment guidelines and the timeline for the domestic value addition (DVA) requirement.


Photograph: Stephen Lam/Reuters

Officials who attended the meeting told Business Standard that the original equipment manufacturers (OEMs) tried to understand whether the complete investment would be made within three or five years and the duration they would have to achieve the 50 per cent DVA.

“The consultation meeting was convened to address queries from auto OEMs.


"We answered the queries regarding the timeline for investment and DVA,” Hanif Qureshi, additional secretary, Ministry of Heavy Industries (MHI), told Business Standard.

The new EV policy announced last month allows reduced import taxes on OEMs that commit to investing at least $500 million (Rs 4,150 crore) and establishing a manufacturing plant within three years.

Additionally, they are also required to achieve a 25 per cent DVA within the initial three years and 50 per cent by their fifth year of operations in the country.

Tesla was represented by its advisor, The Asia Group (TAG) India, at the stakeholder consultation meeting with the MHI.

TAG is a Washington-headquartered strategy and business advisory group.

The representation comes days before Tesla chief executive officer Elon Musk visits India.

Other global companies, including VinFast, Mercedes-Benz, BMW, Kia, Volkswagen, Toyota, Hyundai, and Renault-Nissan, were also in attendance.

Additionally, Indian car makers such as Tata Motors, Maruti Suzuki, and Mahindra & Mahindra were present at the meeting.

“Officials from the Department of Revenue were also present to provide clarification on the concessional duty notification, which facilitates the incentives outlined in the policy,” Qureshi added.

India rolled out concessional import tariffs for global EV makers in March 2024.

It proposes to reduce import duties for interested EV makers to 15 per cent from the current 70 per cent or 100 per cent on vehicles having a CIF (cost, insurance, and freight) value of $35,000 and above for five years from the date of issuance of the approval letter by the government.

However, companies seeking the Customs duty relaxation need to invest $500 million within three years.

Some foreign players with local manufacturing facilities sought clarification on whether they could utilise their existing investments in India to qualify for concessional import duties, another official said.

However, officials from the MHI clarified that only new investments would be eligible for incentives.

“This was the first consultation after the announcement of the policy.

"We plan to commence the application process within two months,” an official working on the scheme said.

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Nitin Kumar
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