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India Considers Reducing EV Import Duties

India could cut import duties on electric vehicles to as low as 40 percent, a move that arrives in the wake of a visit by Tesla.

As Reuters reported Monday (Aug. 9), senior government officials say the tax rate on electric cars could drop from 60 percent to 40 percent for vehicles valued at under $40,000, and from 100 percent to 60 percent on vehicles valued at more than $40,000.

“We haven’t firmed up the reduction in duties yet, but there are discussions that are ongoing,” one of the officials said.

While India is the world’s fifth largest market for auto sales, most of the cars sold there are priced at under $20,000, and very few are high-end electric vehicles. Tesla has argued that lowering import duties would make these cars more affordable.

According to Reuters, the Indian government is in favor of cutting the tax if it means companies like Tesla making their cars in India.

“Reducing import duties is not a problem as not many EVs are imported in the country. But we need some economic gain out of that. We also have to balance the concerns of the domestic players,” a government official told Reuters.

Tesla CEO Elon Musk said last month that his company would be “quite likely” to set up a factory in India if the carmaker was successful with importing its vehicles here.

This news comes just days after U.S. President Joe Biden said EVs should account for half of all auto sales by 2030. This goal is apparently backed by General Motors, Ford and Stellantis, who have pledged to reach a 40 to 50 percent sales goal within the same time frame.

Biden issued a non-mandatory executive order which encouraged automakers and U.S. officials to push for legislation and adoption of electric vehicles, including a target of zero-emission vehicles that use fuel cells and batteries along with plug-in hybrid vehicles with internal combustion engines.

Read more: Biden: EV Should Be Half Of Auto Sales By 2030

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