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Year after setting up office, Tesla struggling with import duty cut
The Karnataka government has tried to keep the proposed investment under wraps as they believed too much coverage on the issue would adversely impact any plans by the company.
Bengaluru:
Many Indian states have invited Tesla to set up shop days after its billionaire founder Elon Musk said the electric car maker is still facing a lot of challenges with the federal government.
“Still working through a lot of challenges with the government,” Musk said in a post on Twitter on January 13, responding to a request for an update on the company’s much anticipated launch in the country.
It has been almost a year since Tesla established an office in Bengaluru. The Karnataka government has been in talks with the US firm but its entry into India depends on the central government. Although India wants Tesla to build a factory in the country, Musk wants import duties to be slashed so that his firm can first establish a market locally.
Meanwhile, other states like Maharashtra, Telangana, West Bengal, Punjab and Tamil Nadu have offered space and attractive incentives so that Tesla invests in their respective regions, which not just promises jobs but also bragging rights and a platform to use it to attract more big brands.
Tesla’s entry into India is expected to encourage higher adoption of green vehicle technologies to help bring down the carbon footprint. It would be in line with the climate-friendly policy goals of Prime Minister Narendra Modi’s government.
The offers by other states was “just posturing” as the hurdles faced by the company like high customs and import duties can only be resolved by the government of India, an official in Karnataka told HT. “We had a meeting and they are struggling with the government of India,” the official said, requesting anonymity.
The Karnataka government has tried to keep the proposed investment under wraps as they believed too much coverage on the issue would adversely impact any plans by the company.
Tesla last year registered a subsidiary company in India, sending out a strong indication of the Cupertino-headquartered electric vehicle maker’s plans to corner a bigger slice of the largely untapped domestic sustainable automobile market last year.
Much like most of his views, Musk’s tweets got the federal and provincial governments excited at the possibility.
Then chief minister of Karnataka BS Yediyurappa was asked to take down a post on Twitter in which he had announced that Tesla would soon be making EVs in the state as it would add to the challenges of the proposed investments.
“With over 400 R&D centres, 45+ EV startups & an EV cluster near Bengaluru, Karnataka has emerged as EV hub of India. Mr @elonmusk, Karnataka would be an ideal destination to set up @Tesla plant. Bengaluru is already Tesla’s maiden address in India,” Murugesh Nirani, Karnataka’s minister for large and medium industries said in a post on Twitter on Tuesday, following tweets by politicians of other states over the weekend inviting Tesla to set up shop in their respective regions.
Tesla India Motors and Energy Private Limited is classified as a subsidiary of a foreign company, according to its filing in the Registrar of Companies. Its registered office is in Bengaluru’s upscale Lavelle Road. The subsidiary has a paid up capital of ₹1 lakh and an authorised capital of ₹15 lakh, according to the filings.
Tesla has named Vaibhav Taneja, Venkatrangam Sreeram and David Jon Feinstein as the three directors for its new entity.
While the Karnataka government had laid out the red carpet for Tesla for any kind of investment, people aware of the developments had said that it would possibly be the setting up of a research and development centre in Bengaluru initially.
Officials later said that they would also be scouting for space to start sales of its vehicles in India, the fourth largest automobile market in the world.
Several Bengaluru-based startups have made a huge play in the EV space, which include Ola, Uber, Bounce and Vogo, among others. They have announced ambitious targets to include more EVs into their fleets.
Bengaluru-headquartered Ola has invested ₹2,400 crore to set up a two-million two-wheeler EV plant in the neighbouring state of Tamil Nadu.
