India to Tesla: Buy $500 Million in Local Car Parts, If You Want Lower Taxes

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After Tesla’s talks with the Indian government reportedly hit a “weird stalemate situation” last month, the government is apparently sending a formal request to the U.S. automaker to commit to spending a certain amount on local components.

The Indian government wants Tesla to purchase at least $500 million in local parts in order to qualify for lowered import taxes, according to a person familiar with the matter (via Economic Times).

Tesla previously asked India to lower import taxes, though the government responded by asking for detailed sourcing plans and a business roadmap prior to considering the import tax breaks.

The source also said it would be possible for Tesla to start at a lower rate and ramp up purchases, though it would need to increase supply by 10 or 15 percent until reaching satisfactory levels of local supply.

Instead, Tesla has previously stated that it hopes to try out the market first by importing vehicles and parts.

India’s taxes are 100 percent on most vehicle imports, marking the highest in the world, while even parts shipped into the nation could range from 15 to 30 percent, depending on the part.

Last month, when asked when Tesla would enter India, Tesla CEO Elon Musk also said the automaker was “working through challenges” with the Indian government.

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