Tesla’s entry into the Indian market is once again on shaky ground as the government says a deal on import duties for electric vehicles is off the table.
India is the largest car market that Tesla has yet to enter. There has been a lot of back and forth between the Indian government and Tesla to make it happen, but negotiations have been more difficult than usual.
The Indian government wants Tesla to build a factory in the country to enter the market, but the carmaker prefers to test the waters with imported vehicles first.
However, India has high import duties on EVs that prevent this.
In 2021, Tesla will officially set up an Indian company in Bengaluru, the capital of the southern Indian state of Karnataka. In the summer, Indian government officials said they were considering Tesla’s proposal to significantly reduce import duties on electric cars.
Later in the year, Tesla vehicles were spotted testing on Indian roads and the company received approval for seven electric vehicle variants in the country.
However, the company wasn’t able to reach an agreement on import duties, and in 2022, Tesla decided to put its plans to enter the Indian market on hold.
Over the past year, there have been renewed efforts for Tesla to enter the market, and the company has been engaged in new negotiations with the government.
Last month, we learned that India was again considering a special deal with Tesla to reduce import duties. A few weeks later, we learned that Tesla was reportedly close to a $2 billion deal to build a factory in India.
It seemed that with the promise of a factory in the country, Tesla would be able to secure an exemption on import duties for its electric vehicles and start building a market before the new factory began production.
However, such a deal appears to be off the table.
It’s unclear whether this will affect Tesla’s plan to build a factory in the country, but the carmaker has made it clear that it would prefer to import vehicles into the market before setting up local production.
