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India Consider Tax Cuts For Imported EVs

India is considering tax cuts for imported electric vehicles following lobbying from Tesla, Reuters has reported, citing two senior government officials.

According to the sources who wished to remain anonymous, one of the tax cuts being considered is of 20 percentage points, from 60 percent to 40 percent, on imported electric vehicles that cost less than $40,000, including the vehicle’s cost, freight, and insurance.

For electric cars that cost over $40,000, the cut being considered is even more sizeable, from 100 percent to 60 percent, the Reuters sources also said.

The report comes days after the Indian government officially rejected a request by Tesla to lower the import taxes on electric vehicles. The Indian government, per reports, is caught in a tug of war with the luxury carmakers, with Tesla suggesting it would build a local factory to make EVs but only after it establishes a foothold in the country via greater sales, for which it needs lower taxes. New Delhi, on the other hand, first wants toe factor commitment before it considers supporting EVs financially with a tax cut.

India is one of the world’s biggest car markets but as Reuters notes in its report, most of the cars sold there cost less than $20,000. EV sales, for their part, account for only 1 percent of all sales, which is no wonder given that the per capita annual income in the subcontinent is only about $2,000.

With this kind of income, it is understandable why India’s luxury car market is minuscule, with annual sales at about 35,000. Foreign luxury carmakers have been lobbying for lower import taxes but they have met with resistance from Indian car producers protecting their market share.

"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," said one of the Reuters sources.

By Irina Slav for Oilprice.com

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