Nirmala Sitharaman says no proposals before ministry to cut import duty on EVs

Finance Minister Nirmala Sitharaman at the B20 Summit on Friday said there are no proposals before the ministry to reduce import duties on electric vehicles (EVs), refuting a Reuters report earlier in the day that mentioned a policy along those lines was under review.

Reuters had reported that India is working on a new EV policy to cut import taxes—to as low as 15% from the current 100%, applicable on cars above $40,000—for automakers that commit to local manufacturing.

Citing sources, the report said that the government had been considering cutting import taxes to clear the way for Tesla's entry into India. Tesla has expressed interest in setting up manufacturing in India and building a new price-competitive EV in India, which would be 25% cheaper than its current entry model.

Sitharaman has, however, denied any such new policies in the making.

Tesla and a number of foreign EV makers have petitioned the government to lower import duties from 100%, saying the duties are among the "highest in the world". High import taxes have, indeed, been a barrier to entry for many foreign EV players, especially those who don't have a local manufacturing setup.

The government, however, has largely resisted this in support of domestic EV manufacturers, including Mahindra & Mahindra and Tata, which have boosted and helped develop strong EV supply chains in the country.

Tesla's Elon Musk has said he hopes to set up shop in India soon and pay a visit country sometime next year.

"I am confident that Tesla will be in India...," he had said after his meeting with Prime Minister Narendra Modi.