Wednesday, December 6, 2023

electric vehicles: Local & foreign EV companies will be offered equal incentives: Government officials

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Any incentives that India offers to facilitate local manufacturing of electric vehicles will be equal for foreign as well as domestic investors, government officials said, amid concerns raised by automakers in India over possible concessions in import duty to American carmaker Tesla.Senior government officials in the know told ET that Tesla has sought provisional tariff concessions as a prerequisite for setting up a manufacturing facility in India, but New Delhi is not in favour of any company-specific exemptions. “The government’s approach is for the industry as a whole and not for any specific company because we have very strong domestic companies in this sector,” said an official, adding that any incentives offered will be equal for domestic and foreign investors.

The government is in the process of drawing up a policy to incentivise local manufacturing of electric cars, at a time when US EV maker Tesla and its relatively lesser-known Vietnamese rival VinFast are firming up their India entry strategy. While policy guidelines are yet to be finalised, local carmakers said offering concessional tariffs to Tesla will adversely impact investments that have already been made or are being made by them to produce electric vehicles.

A senior industry executive who did not wish to be named said while the industry has not yet formally put forth any objections before the government, several carmakers are concerned that any reduction in import duty will result in an unfair advantage to the American carmaker which has yet to make firm investments here. Apart from homegrown auto majors like Tata Motors and Mahindra & Mahindra, which already produce EVs locally, others companies like Maruti Suzuki and Hyundai-Kia have announced significant investments to set up battery/battery-pack assembly plants and lined up for launch more than a dozen electric cars in the market by 2030. While Hyundai has announced investments of ₹20,000 crore in Tamil Nadu, Maruti’s parent Suzuki Motor Corp has committed to invest ₹7,300 crore in setting up a battery plant in Gujarat.

The Department for Promotion of Industry and Internal Trade, which operates under the aegis of the ministry of commerce & industry, has been holding high-level discussions to put in place a scheme for subsidising electric four-wheeler makers linked to investments made by them producing vehicles in the country. Local manufacturing, the government feels, will also boost employment generation while bringing down overall car prices. Tesla though is learnt to be pushing for lower customs duty on imported vehicles till the time a local factory becomes operational. Emails sent by ET to Tesla and the Ministry of Commerce & Industry seeking comment remained unanswered at press time on Sunday. Meanwhile, consultations are ongoing to determine the threshold of investment required to be made by carmakers to avail of benefits under the new scheme to promote local manufacturing.

Last week, minister for commerce & industry Piyush Goyal, while on a trip to San Francisco to attend the third Indo-Pacific Economic Framework, visited Tesla’s factory in Fremont, California and engaged with senior executives at the company. In a post on social media app X, Goyal stated, “Visited @Tesla’s state of the art manufacturing facility at Fremont, California. Extremely delighted to see talented Indian engineers & finance professionals working at senior positions and contributing to Tesla’s remarkable journey to transform mobility. Also proud to see the growing importance of auto component suppliers from India in the Tesla EV supply chain. It is on its way to double its components imports from India. Missed Mr @ElonMusk’s magnetic presence and I wish him a speedy recovery.”

Goyal, however, had clarified that no decision had been made on the carmaker’s entry into the Indian market.

In June, following a meeting with Prime Minister Narendra Modi in New York, Tesla CEO Elon Musk had said his company could soon be setting up a manufacturing base in India. “I am confident that Tesla will be in India… as soon as humanly possible,” Musk had said then.

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