Why it won't be easy for Tesla to drive into India

India will not tailor its policies to suit US EV maker Tesla, and its laws and tariff rules will be formulated to attract all-electric vehicle manufacturers from across the world to set up a base in the world's fastest-growing economy, Commerce and Industry Minister Piyush Goyal said.

Tesla has been seeking an initial tariff concession that would allow it to offset 70 per cent customs duty for cars priced less than $40,000, and 100 per cent for cars of higher value.

In an interview with PTI, Goyal said the government recognises the need for a vibrant EV ecosystem as greater use of battery-run vehicles will cut carbon emissions as well as the staggering oil import bill.

But for this, it will not tailor policies that suit any one company and would rather frame ones that will encourage all-electric vehicle manufacturers from across the world to set up shop in India, he said.

"We are working on several initiatives where we are having inter-ministerial (consultations) and a dialogue with the stakeholders, with potential investors from across the world from Europe, from the United States, from the Far East, from Japan, from Korea," he said.

Tesla made the concession demand a precondition to build a plant in India.

High tariffs on motor vehicles, meant to boost local production, have been a lingering issue for foreign carmakers too.

"Government does not tailor policy for any one individual company or its interests.

"Everybody is free to make their demands. But that does not mean that the government will necessarily take a decision (based on) what you demand," he said.

Goyal was replying to a question about whether the government is looking at giving any concessions to Tesla for setting up a manufacturing facility in India.

The Indian factory, as and when it happens, would be Tesla's sixth vehicle plant.

At present, cars imported as completely built units (CBUs) attract customs duty ranging from 60 per cent to 100 per cent, depending on engine size and cost, insurance and freight (CIF) value less or above $40,000.

The world's largest electric car producer Tesla Inc's chief Elon Musk met Prime Minister Narendra Modi in June last year in New York.

Musk, after meeting the prime minister, said he plans to visit India in 2024.

"We recognise that India must have a vibrant electric mobility ecosystem.

"We recognise that it has multifarious benefits to grow towards electric mobility.

"Not only will it help us in our fight against climate change, it will also improve the environment and lower pollution levels, particularly in cities, which largely suffer because of the ICE (internal combustion engine) or the petrol-diesel fumes that are thrown out," Goyal said.

"So, it has so many multifarious benefits which will impact not only the country's environment but will also impact the country's economy, it will add to our economic output.

"It will save foreign exchange, reduce our trade deficits, help us in our fight against inflation, thereby helping us in reducing interest rates," he added.

The minister emphasised that the sector can be a powerful medium to make the country macro-economically even stronger.

"So it'll be a project (that we) will be continuously looking to encourage all-electric vehicle manufacturers across the world.

"And we are working on several initiatives where we are having a dialogue, inter-ministerial, with the stakeholders, with potential investors from across the world from Europe, from the United States, from the Far East, from Japan, from Korea.

"So we have significant engagements going on across the world," the minister said.

India, the world's third-largest energy consumer, is pitching as an alternate destination for investment for US companies to capitalise on the growing chill between Beijing and Washington.

To attract EV players, the government has rolled out production-linked incentive schemes for advanced chemistry cell manufacturing and component making.

In November last year, Goyal visited the manufacturing facility of Tesla in Fremont, California. The company sourced goods worth about $ 1 billion in 2022.

The government has rolled out production-linked incentives (PLI) schemes (PLI) for advanced chemistry cell (ACC) battery storage with an outlay of Rs 18,100 crore and Rs 26,058 crore PLI scheme for auto, auto-components and drone industries.

The UK, which is negotiating a free trade agreement with India, is also seeking customs duty concessions on exports of electric vehicles under the proposed agreement.

The fast-growing EV market in India is catching the eyes of global players.

The UK is also looking at phasing out ICE (internal combustion engine) vehicles by 2035, and the British auto market is export-driven.

According to experts, the UK's major export destination for vehicles is Europe, and they are looking to diversify their exports.

India's electric vehicles market is expected to grow to one crore units in annual sales by 2030 and create five crore direct and indirect jobs, according to the Economic Survey 2022-23.

As per industry estimates, the total EV sales in India stood at around 10 lakh units in 2022.

In India, Tata Motors is the leading player in passenger electric vehicles.

The company's current EV portfolio comprises Nexon EV range, Tiago EV and Tigor EV.