Updated March 10th, 2024 at 19:51 IST

Everybody free to make demands, India to not tailor policy for Tesla: Goyal

The Union Minister said the government is cognizant of the requirement of a bustling EV ecosystem, since using more battery-run vehicles will slash emissions

Reported by: Business Desk
Piyush Goyal | Image:PTI
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EVs in India:  India will not tailor its policies for any one player, Union Minister Piyush Goyal has said in response to any leeway provided to Elon Musk’s EV company Tesla.

The Commerce and Industry Minister said rules for tariffs and laws will be made in accordance to invite all-electric players globally, for them to establish manufacturing facilities in the world’s fastest-growing economy. 

"Government does not tailor policy for any one individual company or its interests. Everybody is free to make their demands. But that does not mean that the government will necessarily take a decision (based on) what you demand," he told PTI.

US-based Tesla has been demanding a preliminary tariff concession which would permit the company to nullify 70 per cent in customs duty for cars which are below $ 40,000 in value, and 100 per cent for cars priced above that.

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Tesla, which is the world’s largest electric car producer, demanded the concession as a prerequisite to build a facility in the country. Other car manufacturers also find high tariffs on motor vehicles as a lingering issue, which were originally put in place to propel production locally. 

Goyal said the government is aware of the need for a vibrant EV ecosystem, as using more battery-run vehicles will slash carbon emissions and also the humongous charge for oil imports.

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"We recognise that India must have a vibrant electric mobility ecosystem. We recognise that it has multifarious benefits to grow towards electric mobility. Not only will it help us in our fight against climate change, it will also improve the environment and lower pollution levels, particularly in cities, which largely suffer because of the ICE (internal combustion engine) or the petrol-diesel fumes that are thrown out," Goyal said.

However, policies will not be tailored to accommodate the demands of one player in the ecosystem, instead of which the government will focus on formulating rules to attract all-electric makers globally to set base in India, he said.

"We are working on several initiatives where we are having inter-ministerial (consultations) and a dialogue with the stakeholders, with potential investors from across the world from Europe, from the United States, from the Far East, from Japan, from Korea," he said.

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If Tesla does set up an Indian unit, it would become Tesla's sixth vehicle plant.

Currently, importing completely built units (CBUs) of cars attracts customs duty between 60 per cent to 100 per cent, factoring engine size and cost, insurance and freight (CIF) value is less than or over $40,000.

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In June last year, Tesla’s top boss Musk had a meeting with Prime Minister Narendra Modi in New York during the PM’s state visit to the US. 

After his meeting with the Prime Minister, Musk said he plans to come to India in 2024. 

"So, it has so many multifarious benefits which will impact not only the country's environment but will also impact the country's economy, it will add to our economic output. It will save foreign exchange, reduce our trade deficits, help us in our fight against inflation, thereby helping us in reducing interest rates," Goyal said, in recognition of how a vibrant EV ecosystem will help the Indian economy.

The sector can be a powerful medium to make India even stronger macro-economically, Goyal said. 

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"So it'll be a project (that we) will be continuously looking to encourage all-electric vehicle manufacturers across the world. And we are working on several initiatives where we are having a dialogue, inter-ministerial, with the stakeholders, with potential investors from across the world from Europe, from the United States, from the Far East, from Japan, from Korea. So we have significant engagements going on across the world," Goyal said.

India happens to be the third-largest energy consumer globally, and is projecting itself as an alternative for American companies to invest amid a standoff between China and the US. 

The government has also rolled out production-linked incentive schemes to lure EV players, which would focus on advanced chemistry cell manufacturing and component making.

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In November 2023, Goyal visited Tesla’s manufacturing hub in Fremont of California. The EV maker got access to goods worth about $1 billion in 2022.

The government’s PLI scheme for advanced chemistry cell (ACC) battery storage comes with an outlay of Rs 18,100 crore, while for dones, auto components and auto it is Rs 26,058 crore. 

The UK, which is working out a free trade agreement with India, is also looking for concessions in customs duty on electric vehicle exports as part of the proposed agreement.

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India’s fast-evolving EV market is attracting attention from global companies. The UK is also aiming to wind down ICE (internal combustion engine) vehicles by 2035. 

The British auto market is driven by exports.

UK currently exports vehicles majorly to Europe, and is seeking an expansion to export destinations beyond that.

It is anticipated that the market for electric vehicles in India will extend to one crore units in terms of annual sales by 2030, and create five crore direct and indirect jobs, Economic Survey 2022-23 data shows.

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According to industry estimates, cumulative sales for electric vehicles in India was at 10 lakh units in 2022.

Tata Motors is the top player in passenger electric vehicles in the country, with its EV portfolio including Nexon EV range, Tiago EV and Tigor EV.

(With PTI Inputs)

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Published March 10th, 2024 at 19:51 IST