Blog: Powering up

Tesla and OLA are yet to sell a single vehicle in India, but they have managed to whip up much brouhaha already. Earlier this month Tesla had asked the Indian Government to lower import duties on fully imported EVs – currently EVs are taxed at the same rate as IC engine cars. 

Notably, Hyundai too backed this request, however in response, OLA feels the Government should not do so, with CEO Bhavish Aggarwal saying we should “have confidence in our ability to build indigenously and also attract global OEMs to build in India, not just import.”

Naturally this has sparked much nationalistic debate about allowing a foreign player easy entry into our market. After all why should outside firms be allowed an easier entry when they should instead ‘make in India’.  And this is a very valid point made, we must continue to increase our manufacturing economy, luxury brands like Mercedes and Audi have for long being making cars in India and so this isn’t something new. 

However, getting brands to make their goods in India it isn’t as easy as putting out a tweet or statement asking them to do so. The company’s background and size, the volume of local market demand, export potential, current manufacturing feasibility and support infrastructure and many other factors have to be considered. This holds true for EVs too, as they use completely different propulsion technology and require a completely different support ecosystem. 

Thus to really kick-start EV production in India, a tweaked import policy with lower duties could be just what the doctor ordered. And speaking of doctors, Dr. Pawan K. Goenka former Mahindra MD – and according to his Twitter bio ‘committed to aatmanirbhar Bharat’ – also voiced his support saying he thinks the Govt. should consider Tesla’s request and lower the 100% slab to 60 % for EVs. For the record there are two slabs; import duties on cars priced below $40,000 is 60 percent, and it’s 100 percent for cars priced above $40,000. Tesla had asked for a reduction to 40 percent. 

As stated earlier Hyundai too backed Tesla with the company MD and CEO, S S Kim, saying he thinks that with lower duties and more investment on charging infrastructure we can ‘in about two years reach a meaningful point in terms of scale for EV production’. Being a large local manufacturer, Hyundai’s backing should also be taken seriously.  

Also interestingly, the Government already offers some import concessions, its allows an import of upto 2500 units per year without them having to be homologated in India, provided of course that they RHD and homologated in other recognized countries. This is done to make it easier for international auto makers to test market their vehicles in India and it also offers customers a wider choice of high end vehicles.

Similarly a volume based concession or perhaps even a time based one or a combination of both can easily be thought off in the case of EVs too. These small concessions won't kill local makers, but it can give a fillip to the EV movement which only requires some concerted planning and effort rather than unilateral statements, because in the end, India will be a global EV superpower not because we said so, but because we cleverly planned and did so.

Also see:

FADA: Ola Electric has a lot to prove and understand

Ola Electric scooter to offer doorstep delivery, 10 colour options

Hyundai backs Tesla’s call for lower EV import duties

Tesla infotainment UI could get Hindi language support