Exclusive-Tesla puts India entry plan on hold after deadlock on tariffs-sources

div classBodysc17zpet90 cdBBJodivpBy Aditi Shahp

pNEW DELHI Reuters – Tesla Inc has put on hold plans to sell electric cars in India, abandoned a search for showroom space and reassigned some of its domestic team after failing to secure lower import taxes, three people familiar with the matter told Reuters.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe decision caps more than a year of deadlocked talks with government representatives as Tesla sought to first test demand by selling electric vehicles EVs imported from production hubs in the United States and China, at lower tariffs. p

pBut the Indian government is pushing Tesla to commit to manufacturing locally before it will lower tariffs, which can run as high as 100 on imported vehicles.p

pTesla had set itself a deadline of Feb. 1, the day India unveils its budget and announces tax changes, to see if its lobbying brought a result, the sources with knowledge of the companys plan told Reuters. p

pWhen Prime Minister Narendra Modis government did not offer a concession, Tesla put on hold the plans to import cars into India, added the sources, who sought anonymity because the deliberations were private.p

pFor months, Tesla had scouted for real estate options to open showrooms and service centres in the key Indian cities of New Delhi, Mumbai and Bengaluru but that plan is also now on hold, two of the sources said. p

pTesla did not respond to an email seeking comment.p

pAn Indian government spokesman did not immediately respond to a request for comment. p

pTesla has assigned additional responsibilities for other markets to some of its small team in India. Its India policy executive Manuj Khurana has taken on an additional “product” role in San Francisco since March, his LinkedIn profile shows.p

pAs recently as January, Chief Executive Elon Musk had said Tesla was “still working through a lot of challenges with the government” in regard to sales in India.p

pBut the strong demand for Teslas vehicles elsewhere and the standoff over import taxes prompted the shift in strategy, the sources said.p

pModi has sought to lure manufacturers with a “Make in India” campaign, but his transport minister, Nitin Gadkari, said in April it would not be a “good proposition” for Tesla to import cars from China to India.p

pBut New Delhi had clinched a win in January, when German luxury carmaker MercedesBenz said it would start assembling one of its electric cars in India. p

pTesla had looked to gain an early advantage in Indias small but growing market for electric vehicles, now dominated by domestic automaker Tata Motors. p

pTeslas price tag of 40,000 at minimum would put it in the luxury segment of the Indian market, where sales make up just a tiny fraction of annual vehicle sales of about 3 million.p

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pp Reporting by Aditi Shah Additional reporting by Aditya Kalra Editing by Kevin Krolicki and Clarence Fernandezp

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