India's Maharashtra state bats for Tesla over import tax on EVs

By Aditi Shah

NEW DELHI (Reuters) - India's western Maharashtra state on Wednesday urged the federal government to lower tax rates on imported cars in the budget on Feb. 1, following calls by electric carmakers like Tesla.

Maharashtra is a leading auto manufacturing hub for domestic carmakers like Tata Motors and Mahindra & Mahindra, both of which are investing in manufacturing electric cars locally and have opposed Tesla's pressure to lower taxes.

The state's environment minister in his letter to Prime Minister Narendra Modi's finance minister, Nirmala Sitharaman, said lowering taxes for a limited period of time would boost India's supply chain ecosystem and manufacturing process for electric vehicles (EVs).

"Pioneering companies like Tesla, Rivian, Audi, BMW among many others must be given a time-bound concessionary customs rate for the import of vehicles," Aaditya Uddhav Thackeray said in the letter, released by him on Twitter.

Thackeray, also recommended in his letter lowering the tax rate for a maximum period of three years or for a defined number of vehicles for any company that wishes to import EVs or auto components to build such cars in India.

Currently, India levies import duties as high as 100% on high-end cars, including EVs, in a bid to protect and promote the local industry. Tesla, which wants to begin selling cars in India, is lobbying to reduce the rate to 40%.

Maharashtra's plea to Modi's government follows a tweet by Tesla CEO Elon Musk last week in which he said the company was "still working through a lot of challenges with the government" ahead of a possible launch in India.

(Reporting by Aditi Shah;Editing by Elaine Hardcastle)