Import duty on cars in India is way too high as per foreign automobile companies like Mercedes Benz and Tesla. Recently, Tesla demanded a reduction in the tariffs levied on its Electrical Vehicle in India. Heavy Industries Ministry of India put forth a demand of its own to counter Tesla’s demand. They asked Tesla to start production in India first. Tax concessions might be discussed later on.
Mercedes-Benz, the leading luxury car brand in India has supported Tesla’s demand of reducing import duties. The MD of Mercedes-Benz in India, Martin Schwenk said that the import duties in India are extremely high. They should be reduced quickly to help develop the Indian market for new cars that carry global technologies.
Elon Musk, the CEO of Tesla tweeted that the the company is eager t launch its cars in India but the high import duty is way too discouraging. He demanded a temporary relief on Import duties which he termed as “the highest in the world”. “If Telsa is able to succeed with imported vehicles, then a factory in India is quite likely,” he added.
Currently India imposes 60%-100% import duty on completely built units. 100% for cars with CIF more than $40,000 and 60% on those costing less.
Why is import duty on cars “outrageous” in India:
The major reason for setting high import duties on cars is to boost local manufacturing.
The government’s focus on import substitution and domestic industry development has influenced this decision. High import duties on cars will discourage foreign companies to enter in the Indian market. Thus, saving the domestic industry from tough competition. This move will encourage Indian consumers to buy from local vendors and firms, thereby increasing the GDP of India.
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