Maha minister writes to FM, seeks import duty cuts on EVs for firms like Tesla

Tesla CEO Elon Musk has found an ally in Maharashtra’s Minister for Tourism and Environment Aaditya Thackeray, who has requested to Union Finance Minister Nirmala Sitharaman that the import tariff on electric vehicles (EV) be reduced.

Thackeray stated in his letter to the Finance Minister that the concessionary rate may be for a maximum of three years or for any firm intending to import cars for retail sale or international standard components for building EVs in India to have a specified import limit.

‘Pioneering companies like Tesla, Rivian, Audi, BMW among many others must be given a time-bound concessionary customs rate for the import of vehicles for retail sale. This will drive the aspiration value in the market, boost investment in our supply chain and encourage the startup ecosystem to follow the lead of such companies’, he said.

He believes that the reduced rate might be offered in exchange for a set investment guarantee in India’s vehicle supply chain or charging infrastructure, which could be funded by the customs money that the government would otherwise forgo under the present tax regime, and evaluated yearly.

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‘A mere high import duty only adds to the burden of the customer and does not lay the ground for any industry investment as custom revenues are not directly used for sectoral investments’, said the letter dated January 17.

The Maharashtra minister also requested Sitharaman to authorise priority sector funding for EVs, noting that retail lending to help consumers and institutions in finance EVs has been delayed. ‘EVs in the Reserve Bank of India’s priority sector lending guidelines can encourage the financial sector to mobilise necessary capital’, he said.

The letter arrives just days before the Union Budget for Fiscal Year 2022-23 is released. High import duties for electric vehicles have been a source of concern for global automakers, notably Elon Musk’s Tesla.

Rather than providing import duty relief, the Centre has favoured the development of electric vehicles in India by global players such as Tesla.

In a recent tweet, Musk had said: ‘Still working through a lot of challenges with the government’. Following this, Maharashtra, Telangana, and Punjab have encouraged the US-based EV producer to set up production operations in their states, giving the firm support and incentives.