Exclusive – Tesla suspends India entry plan after deadlock over sources of tariffs

BThe Aditi Shah
New Delhi – May 13 (Reuters)Tesla Corporation TSLA.O Three people familiar with the matter told Reuters that plans to sell electric cars in India are on hold, and it has abandoned the search for a showroom and rehired some members of its local team after it failed to secure lower import taxes.
The decision came after more than a year of stalled talks with government representatives as Tesla sought to test demand first by selling electric cars imported from production centers in the United States and China, at low tariffs.
But the Indian government is pushing Tesla to commit to manufacturing locally before it lowers tariffs, which can be as high as 100% on imported cars.
Sources familiar with the company’s plan told Reuters that Tesla has set itself a February 1 deadline, the day India reveals its budget and announces tax changes, to see if its pressure has paid off.

The sources, who requested anonymity because the deliberations were confidential, added that when Prime Minister Narendra Modi’s government did not offer a concession, Tesla suspended plans to import cars into India.
Two sources said Tesla has been looking for real estate options for months to open showrooms and service centers in major Indian cities of New Delhi, Mumbai and Bengaluru, but that plan is now also on hold.
Tesla did not respond to an email seeking comment.
An Indian government spokesman did not immediately respond to a request for comment.
Tesla has assigned additional responsibilities for other markets to some of its small team in India. His LinkedIn profile shows that India’s chief policy officer, Manoj Khurana, has taken on an additional “producer” role in San Francisco since last March.
As recently as January, CEO Elon Musk said that Tesla was “still working through a lot of challenges with the government” regarding sales in India.
But sources said strong demand for Tesla cars elsewhere and the standoff over import taxes prompted a shift in strategy.

Modi has sought to woo manufacturers with a “Made in India” campaign, but Transport Minister Nitin Gadkari said in April it wouldn’t be a “good proposal” for Tesla to import cars from China to India.
But New Delhi scored a victory in January when German luxury car maker Mercedes-Benz DAIGn.DE She said she would start assembling one of her electric cars in India.
Tesla was looking to gain an early edge in India’s small but growing market for electric vehicles, which is now dominated by local automaker Tata Motors. tamons.
Tesla’s minimum price of $40,000 would put it in the luxury segment of the Indian market, where sales make up only a small part of annual car sales of about 3 million.
Long road for Tesla in India with infrastructure and supply chain problems
(Reporting by Aditi Shah; Additional reporting by Aditya Kalra; Editing by Kevin Kroliky and Clarence Fernandez)

(([email protected]; +91-11-4954 8023, +91-11-3015 8023; Reuters Correspondent: Twitter: @aditishahsays))

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