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India says Tesla cars won’t get tax relief if they are made in China

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India has, once again, made clear that Tesla must make locally to get any relief in import duties.

The Narendra Modi government informed parliament yesterday (Feb. 8) that there cannot be a situation where the “market is India, but jobs are created in China.” The government further told the Lok Sabha, parliament’s house of people, that the US automaker is yet to apply for schemes as per the centre’s policy.

The government statement has come at a time when Tesla is lobbying for tax relief, without which, it feels, its cars will be unaffordable in India. Last month CEO Elon Musk said his company was working through “a lot of challenges” to debut in India.

Tesla wants to sell in India but doesn’t want to produce locally as it plans to manufacture its models in its Gigafactory in China.

Industry players also feel India will not let China go one-up, especially at a time when the two countries have been involved in a border face-off.

Explaining the government’s hesitancy to provide any relief, Mohit Yadav, co-founder of EV infra firm BOLT, had earlier told Quartz that the government has to “incentivise local EV manufacturing in India especially after the ‘Make in India’ campaign and issues related to heavy dependency on Chinese manufacturers that we witnessed during the covid-19 pandemic.”

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