High import duties keep Tesla off Indian roads

New Delhi: Breaking silence over his India plans, Tesla CEO Elon Musk has blamed high import duties on electric cars for blocking the entry of Tesla vehicles in the country.

India has taken a slew of measures to promote the use of electric cars in the country. It recently slashed Goods and Services tax (GST) on electric vehicles to five per cent from the earlier 12 per cent, but it levies high duty on imported vehicles to protect domestic automakers.

"I'm told import duties are extremely high (up to 100 per cent), even for electric cars. This would make our cars unaffordable," Musk said late on Thursday while responding to a tweet from an Indian follower.

Close on the heels of the Union Budget providing tax relief for buying electric vehicles, the GST Council in its meeting last month cut the tax on electric vehicles (EV) from 12 per cent to 5 per cent, effective August 1, 2019.

The council has also slashed rate for EV chargers from 18 per cent to 5 per cent, making electric vehicles affordable for buyers.

The twin rate cuts are set to further boost the EV sector. The Budget on July 5 had proposed income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs.

This is a major push to electric vehicles which has so far seen lukewarm response in the country owing to high ownership cost and insufficient infrastructure.

Not surprisingly, the share of electric vehicles out of total annual vehicle sales in the country is less than 1 per cent.

However, the Narendra Modi government is committed to transform the transport sector by promoting the use of green cars and bikes.

Musk, who has been trying to come to India for the past couple of years, told a visiting group of IIT Madras students last month that Tesla may run on Indian roads in 2020.

Musk tweeted in March this year that he would love to be in India in 2019 or next year.

"Would love to be there this year. If not, definitely next! India," Musk tweeted. He blamed government policies, including FDI norms, for giving up on his India dreams.

Earlier this year, Tesla's Indian-origin Chief Financial Officer Deepak Ahuja announced his retirement from the firm, bringing Musk's India dream to a halt again.

Tesla was expected to enter India with the Model 3 that sells for nearly $35,000.