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India Tesla factory likely if it succeeds in importing cars, Musk says

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A Tesla Inc. factory to produce cars in India is “quite likely” if the electric automaker can first begin sales with imported vehicles, according to Elon Musk.

The California-based car producer is currently lobbying for lower taxes on imports as it considers plans to expand into India, one of the world’s biggest emerging car markets, people with knowledge of the details said Friday.

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“Import duties are the highest in the world by far of any large country,” Musk said on Twitter, replying to a question about the prospect of sales in the nation. “Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India.”

The firm is hopeful India will offer “at least a temporary tariff relief for electric vehicles,” Musk said. “If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely.”

Tesla has written to India’s transport and industry ministries seeking a reduction of import duties on electric cars to 40 percent from the current range of 60 percent to 100 percent, according to the people with knowledge.

Electric vehicles account for less than 1 percent of new passenger vehicles and two-wheeler sales in India, compared with about 5 percent in China, where Tesla set up its first factory outside of the US and now dominates the market.

Indian Prime Minister Narendra Modi’s government has committed support for the EV industry through subsidies, though factors like sparse charging infrastructure and high costs have so far limited adoption of electric models.

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