Tesla's India plans dealt blow as minister rules out import duties cut

 Tesla is seeking to make inroads into India, where electric vehicles account for less than 1% of annual car sales.

India said it has no plans to cut import duties on electric vehicles, weeks after Tesla Inc. appealed to the government to slash taxes, and its billionaire chief Elon Musk floated the possibility of a local factory once it starts selling wholly-built units from overseas in the world’s second-most populous nation.

“No such proposal is under consideration in Ministry of Heavy Industries,” junior minister Krishan Pal Gurjar told parliament on Monday, referring to the ministry in charge of making policies for the auto industry. He added that the government is however taking steps to promote the use of electric cars by lowering domestic taxes and adding charging stations.

The reply to lawmakers may be perceived as part of the tug-of-war between Prime Minister Narendra Modi’s administration, which wants to boost local manufacturing, and Tesla, which is urging India to allow it to import cars more cheaply before it commits to setting up a factory in the country. Tesla last month wrote to the transport and industry ministries requesting them to cut import duty on electric cars to 40% from the current range of 60%-100%, Bloomberg News had reported.

A Tesla factory to produce cars in India is “quite likely” if the electric automaker can first begin sales with imported vehicles, Chief Executive Officer Musk said in a subsequent tweet. Musk has for years showed his eagerness to enter one of the world’s most-promising automobile markets, but complained that Indian rules prohibit him from testing the waters first with imports, as high duties make Tesla cars “unaffordable.”