Indian Government Fires Back At Elon Musk As He Blames Red Tape For Delay In Tesla India Entry

Tesla Inc’s TSLA attempted India foray has been mired in red tape, the billionaire entrepreneur and CEO Elon Musk said on Wednesday.

What Happened: The world’s richest person tweeted to say the company is still working through a lot of challenges with India's government to secure final approvals to begin selling cars in the world’s fifth-largest auto market.

Musk was responding to a Twitter query, seeking an update on when Tesla would finally begin selling its cars in India. 

The development comes a month after Tesla’s V2 superchargers were spotted in India and reports that the maker of Model 3 sedan had secured approvals for a total of seven models from the country’s vehicle testing and certification agencies. 

Tesla’s Model 3 and Y test cars have often been spotted on Indian roads. The electric vehicle maker currently sells four models and their variants in the United States.

Why It Matters: An unnamed senior Indian government official, in a conversation with leading local daily ET Now, dubbed Musk's tweets a tactic to pressurize the Indian government through social media.

"At present, Tesla can bring in the cars in CKD (completely knocked down) form with zero duty and assemble and sell them here. However, the company wants the government to reduce import duties on cars without any commitment to producing in India," the official reportedly said.

"The government has put in place a PLI scheme for the auto sector, particularly EVs under which Tesla will get benefit if it produces here," the official told ET Now. 

The Austin, Texas-based Tesla initially aimed to enter India last year but has instead been lobbying with the local government there to lower import taxes on electric vehicles before it begins selling cars in the country.

See Also: Tesla Superchargers Spotted In India Even As EV Maker Said To Face Fresh Regulatory Roadblock

Musk tweeted in July to say that the import duties in India are the highest in the world. Tesla says that India's duty structure would not make its business in the country a "viable proposition."

Electric vehicles draw an import duty of 100% if priced above $40,000 and 60% for models below $40,000. 

See Also: Tesla Nears Entry Into Indian Market As Four Models Get Regulatory Approval

India had reportedly asked Tesla last year to increase local procurement and furnish a detailed manufacturing plan before it approves the electric vehicle maker’s demands for lower taxes.

Musk owned SpaceX, which plans to launch its satellite internet service Starlink in India, too has met a roadblock in the country where it has been asked to refund clients and refrain from fresh orders until it secures a license.

Price Action: Tesla shares closed 3.9% higher at $1,106.2 a share on Wednesday.