Elon Musk Confirms India Trip, Eager for Meeting with PM Modi

Elon Musk, the CEO of American electric car manufacturer Tesla, has officially announced his upcoming visit to India, with a scheduled meeting with Prime Minister Narendra Modi. This announcement was made through a post on X, where Musk expressed his anticipation for the meeting. The visit is expected to occur in the week of April 22, during which Musk is likely to unveil Tesla's investment plans within the country.

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Last year, during Prime Minister Narendra Modi's visit to the US, Musk had a meeting with him and mentioned his intentions to visit India in 2024. He also showed optimism about Tesla's entry into the Indian market. This forthcoming trip by Musk follows closely on the heels of the Indian government's introduction of a new electric vehicle (EV) policy aimed at encouraging major global manufacturers, including Tesla, to establish manufacturing units in India.

The new EV policy offers import duty concessions to companies that commit to investing a minimum of USD 500 million in setting up manufacturing facilities. Specifically, it allows these companies to import a limited number of cars at a reduced customs/import duty of 15 percent for vehicles priced at USD 35,000 and above. This incentive is valid for five years from the issuance date of the approval letter by the government.

Currently, cars imported as completely built units (CBUs) are subject to customs duties ranging between 70 percent and 100 percent. The rate is determined by the engine size and the cost, insurance, and freight (CIF) value of the vehicle. CBUs with a CIF value exceeding USD 40,000 are levied a 100 percent import duty if they have a petrol engine size over 3000 cc or a diesel engine over 2500 cc. Meanwhile, vehicles under USD 40,000 face a 70 percent duty for smaller engines.

The Indian government's policy aims to position India as a prime destination for EV manufacturing and attract significant investment from renowned global manufacturers. Tesla had previously approached the Indian government requesting duty reductions for importing its vehicles into India. Musk had stated in 2022 that Tesla would consider manufacturing its products in India only if it were allowed to sell and service its cars in the country first. Furthermore, in August 2021, he mentioned that Tesla might establish a manufacturing unit in India contingent upon the success of its imported vehicles, highlighting the challenge posed by India's high import duties compared to other large countries.