India considers lowering duty to woo Elon Musk’s Tesla, report says

India is considering reducing taxes on imported electric vehicles at the request of Elon Musk's Tesla, which has made the tax break a precondition for setting up its manufacturing plant in the country, the Financial Times reported.

According to the Financial Times report, Tesla has sought an initial concession on customs duty levied on imported cars in India. All completely built-up (CBU) vehicles priced below $40,000 now face an import duty of 70%, while those priced above $40,000 invite an import duty of 100%.

The FT report, while quoting officials, noted that the government is considering reducing the duty to 15% for electric vehicles of all prices. However, the report notes that this policy hasn't yet been agreed within the government.

One of the officials quoted by the FT said: “Their view has always been that they need some tariff concessions at least in the interim period… It would have some kind of sunset clause.”

“We want to create a package which is good for India and which doesn’t become a curated package for one company… Others are free to take advantage of this window, subject to meeting these kinds of requirements.” another official added.

The factory in India would be the sixth worldwide for the electric vehicle company, and Elon Musk has even hinted at producing a lower-priced EV called the Model 2, which could be well suited to the price-conscious Indian market.

Piyush Goyal to meet Elon Musk this week?

A recent Reuters report had suggested that Commerce Minister Piyush Goyal, who will be in San Francisco this week to attend the Indo-Pacific Economic Framework for Prosperity and the Asia-Pacific Economic Cooperation forum, will meet Musk, marking the highest-profile such meeting since the Tesla chief met Prime Minister Modi in June this year.

The report notes that Musk and Goyal are likely to discuss Tesla's plan to set up an Indian factory, sourcing components, setting up a charging network in the country and manufacturing a $24,000 car.