Volkswagen Pushes India For Lower EV Import Tax

Volkswagen has joined Tesla in urging Indian officials to lower the import taxes they impose on electric cars, a move that the firm says is motivated by increasing demand for so-called clean vehicles.

“The market for EVs has to be big enough for investments to come in, and for that we shouldn’t be placing barriers,” Gurpratap Boparai, managing director of Skoda Auto Volkswagen India, told Reuters, saying that a drop to a 25 percent import tax would drive innovation and would not cripple the economy.

India typically taxes fully built imported cars as high as 100 percent of their value, but government leaders are considering a drop to 40 percent after Tesla’s Elon Musk said he’d be “quite likely” to build a factory in that nation if residents showed interest in his fleet of luxury EVs.

Daimler, Mercedes-Benz and Hyundai are in favor of lower import taxes, but India-based Tata Motors opposes them on grounds that they could take business away and hurt the country’s quest to ramp up local production.

Related: India Considers Reducing EV Import Duties

Senior government officials said on Monday (Aug. 9) that India’s import tax rate on electric cars could drop from 60 percent to 40 percent for vehicles valued at under $40,000, and from 100 percent to 60 percent on vehicles valued at more than $40,000.

India is the world’s fifth-largest market for auto sales, but most of the cars sold there are less than $20,000, and very few are high-end electric vehicles. Tesla has argued that lowering import duties would make these cars more affordable.

Read Next: Biden: EV Should Be Half Of Auto Sales By 2030

Last week, U.S. President Joe Biden got support from General Motors, Ford and Stellantis when he said that half of the country’s auto sales should be EVs by 2030.

Those companies signed a pledge to reach a 40 to 50 percent sales goal within the same timeframe, as Biden signed a non-binding executive order to encourage automakers and U.S. officials to push for legislation that supports the adoption of EVs across the country.