In blow to Elon Musk's Tesla, Centre says 'no proposal on import duty subsidy'

ITDC INIDA EPRESS/ ITDC NEWS: Currently, Tata Motors is the highest-selling electric car manufacturer in India. Its Nexon EV is the highest selling electric car in the country.

The government of India is not considering reducing taxes on imported electric vehicles, Som Parkash, the minister for state for commerce and industry, told parliament on Wednesday. The declaration directly hits Tesla's India plans as Elon Musk-owned company had requested for tax breaks to open its mega factory in the country.

“Presently, there is no proposal either to provide an exemption from local value addition cost or to provide a subsidy on the import duty on electric vehicles in India,” the minister of state said.

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Currently, Tata Motors is the highest-selling electric car manufacturer in India. Its Nexon EV is the highest selling electric car in the country.

Recently, MG Motors also launched its electric car in India but it hasn't seen the success Tata Nexon EV has seen.

Also read: Tesla ready to open factory in India, but has this condition

The Indian government has been attempting boost local EV production. In 2021, it launched a 3.1 billion dollar incentive program. It is also offering incentives to companies wanting to make batteries in India, reported Bloomberg.

The government’s statement is an unexpected turn considering it was working on a policy that would have allowed international companies to import electric cars on concessional tax rates if they commit to eventually manufacturing in India, Bloomberg News reported last month.

Tesla and the Indian government have been in talks for manufacturing the cars in India. Elon Musk had sough lower taxes to bring the manufacturing to the country.

In June, Musk had said his company would like to invest in India. However, with the government's admission, the plan could get delayed.

The two sides were in talks and were closing in on an agreement which entailed selling cars in the country manufactured abroad from 2024. They were also mulling a mega factory in India in the next two years. However, the plan appears to be delayed for now.

Union commerce minister Piyush Goyal had recently said that Tesla was planning to buy parts from India worth 1.9 billion this year.