No problem in Tesla producing EVs in India but must not import vehicles from China: Gadkari

Union minister Nitin Gadkari on Tuesday said if the US-based Tesla is ready to manufacture its electric vehicles in India then there is ‘no problem’ but the company must not import cars from China.

In an interactive session at the Raisina Dialogue, Gadkari further said India is a large market and there is a huge potential for all electric vehicles. “If Elon Musk (Tesla CEO) is ready to manufacture in India then there is no problem … Come to India, start manufacturing, India is a large market they can export from India,” he said.

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The road transport and highways minister said his request to Musk is to come and manufacture in India. “But if he wants to manufacture in China and sell in India, then it cannot be a good proposition for India,” Gadkari said.

According to him, India has got all the competence. “The vendors are available. We have all types of technology, we have all the spare parts,” he said, adding that it will be a win-win situation for both India and Tesla. Last year, the heavy industries ministry had also asked Tesla to first start manufacturing its iconic electric vehicles in India before any tax concessions can be considered.

At present, cars imported as completely built units (CBUs) attract customs duty ranging from 60-100 per cent, depending on engine size and cost, insurance and freight (CIF) value less or above USD 40,000. Last year, in a letter to the road ministry, the US firm had stated that the effective import tariff of 110 per cent on vehicles with customs value above USD 40,000 is “prohibitive” to zero-emission vehicles.

It had requested the government to standardize the tariff on electric cars to 40 per cent irrespective of the customs value, and withdraw the social welfare surcharge of 10 per cent on electric cars. It had stated that these changes would boost the development of the Indian EV ecosystem and the company will make significant direct investments in sales, service, and charging infrastructure; and significantly increase procurement from India for its global operations.

The company had argued that these proposals would not have any negative impact on the Indian automotive market as no Indian OEM currently produces a car (EV or ICE) with ex-factory price above USD 40,000 (around Rs 30.6 lakh) and only 1-2 per cent of cars sold in India (EV or ICE) have ex-factory/customs value above USD 40,000.

Gadkari also noted that liquefied natural gas (LNG) and green hydrogen are the future fuels of India. The minister announced that the Ministry of Road Transport and Highways (MoRTH) has decided to use glass fibre instead of steel to reduce the cost of construction.