India has
effectively turned down Elon Musk’s request for tax breaks on Tesla cars. Musk,
the 50-year-old billionaire owner of Tesla, had been seeking tax breaks from
the Indian government for a while. But the government has maintained that the
US-based electric car company must manufacture in India in order to be
considered for tax benefits.

Vivek Johri,
chairman of India’s Central Board of Indirect taxes and Customs, told Bloomberg
Thursday, “We looked at whether the duties need to be re-jigged, but some domestic
production is happening and some investments have come with the current tax

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“So, it is clear
that this [taxes] are not a hindrance,” Johri said.

The second-most
populous country in the world, India has been battling a high unemployment rate
for some time now. As such, while the government does seek to boost the
automobile industry, local manufacturing remains its priority.

Earlier this year,
Musk, a darling of Twitter users, wrote on the platform that Tesla was “still
working through a lot of challenges with the Indian government.”

The billionaire
entrepreneur, who also leads SpaceX, has repeatedly cited high import duties in
India as the reason for not launching the high-tech eV in the market.

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According to estimates
reported by, a Tesla in the United States is priced around $44,690
which comes to nearly Rs 34 lakh in Indian currency. However, with the import
duties included, a Tesla in India would cost somewhere around Rs 60 lakh.

Musk’s tweet about
the challenges Tesla was facing in India led to at least four Indian states
call on the billionaire to set up shop, including Telangana, West Bengal, Maharashtra
and Punjab.

The Union
government, however, maintains its demand for local manufacturing. Johri said
the US-based car manufacturer should follow the lead of domestic auto makers in
India to help build capacity of electric vehicles.

India recently
adopted the Bharat Standard VI (BS-VI) emission norms to curb vehicular
pollution. Electric vehicles too remain the government’s priority. However, a
major bottleneck for India is the absence of adequate charging infrastructure.
The Indian government expects local manufacturing to also enable the creation
of charging infra.

On the other hand,
Tesla wants to first enter the market as a seller and may subsequently think
about turning manufacturer. Although, it is pertinent that India doesn’t really
have critical raw materials such as lithium, cobalt and nickel, which are used
to make electric cars in large quantities.