In a special interview with Moneycontrol, Industry Secretary Rajesh Kumar Singh explained that the tax reduction provided through the Electric Vehicle (EV) policy should not be considered as “concessional” because a 15% duty rate is common in many countries.
Rajesh Kumar Singh, the secretary in the Department for Promotion of Industry and Internal Trade (DPIIT), mentioned that India is excited to welcome global manufacturers like Tesla Inc. He hopes that Elon Musk’s involvement in the Indian market will extend beyond electric vehicles to include initiatives such as battery technology and Starlink projects.
Rajesh Kumar Singh, the secretary in the Department for Promotion of Industry and Internal Trade (DPIIT), expressed optimism about Elon Musk’s upcoming meeting with Prime Minister Narendra Modi. Singh hopes that Tesla’s involvement in India will lead to various innovative projects, especially in electric vehicles (EVs).
Regarding the government’s EV policy, which includes lower import duties for manufacturers, Singh clarified that this initiative is not just aimed at attracting Tesla but any company interested in entering the Indian market.
Singh emphasized that the tax reduction offered under the EV policy is not considered a “concession” because a 15 percent duty rate is standard in many countries.
When asked about what Elon Musk might announce during his meeting with Modi, Singh mentioned that it is up to Tesla to provide clarification. According to Moneycontrol’s report on April 16, Musk’s meeting with Modi is expected on April 22, after which a general announcement is anticipated regarding Tesla’s entry into India.
The DPIIT secretary spoke exclusively to Moneycontrol about various topics, including the importance of moving towards lower tariffs and creating a compliance ecosystem for fintech startups. Here are the key points from the interview:
Regarding the tax incentives in the new Electric Vehicle (EV) policy, the reception has been positive with little criticism. There is a perception that these incentives give an advantage to global EV manufacturers over domestic ones. However, this hasn’t sparked much concern because domestic manufacturers currently don’t offer vehicles at the price point where imported vehicles from global players qualify for lower import duties. This is why there hasn’t been backlash against the policy from local manufacturers.
The DPIIT secretary recently discussed several important topics in an interview with Moneycontrol. Here are the key points from the conversation:
- Electric Vehicle (EV) Policy and Global Players: The new EV policy’s tax incentives have been well-received. While there’s a perception that these incentives favor global EV makers over domestic ones, local manufacturers are not affected because they don’t currently offer vehicles at the price point eligible for lower import duties. The duty reduction isn’t considered “concessional” because a 15% duty rate is common globally.
- Tesla’s Potential Entry into India: The EV policy is designed to attract not just Tesla but any company interested in entering the Indian market. Other companies like VinFast have already announced plans. The hope is that Tesla’s presence in India will lead to various innovative projects beyond automobiles, such as battery technology and Starlink.
- Lower Tariff Regime: India should consider moving towards a lower tariff regime to boost competitiveness and encourage domestic industries to export more. Tariff reduction can help industries become more competitive internationally.
- GST on Hybrid Vehicles: There’s a suggestion to reduce GST on hybrid vehicles to 12% due to their efficiency and minimal pollution. While GST on fully electric vehicles is 5%, other vehicles attract a higher rate. The DPIIT supports a moderate GST rate for hybrids, balancing environmental benefits with consumer preferences.
- Support for Fintech Startups: Recent concerns over fintech regulations shouldn’t impact the overall startup ecosystem. The government is committed to supporting startups by providing clarity on regulations, facilitating compliance, and offering mentorship. Startups must focus on compliance and prudent fund utilization to maintain market credibility.
- Performance of PLI Schemes: The PLI schemes have shown success in some sectors like electronics and pharmaceuticals but not in textiles and steel. Despite challenges, investment targets have been met, and employment generation is progressing. Adjustments to PLI schemes will be considered by the next government.
- FDI Trends and Policies: Recent fluctuations in FDI inflows are attributed to global factors like geopolitical instability and economic conditions. India aims to maintain an average FDI inflow of $100 billion over the next five years by focusing on economic stability, consumer market growth, infrastructure development, and ease of doing business.
- Trade Pacts and Investment Commitments: Trade agreements like the one with the European Free Trade Association (EFTA) nations, which include a significant investment commitment to India, serve as models for future agreements. India seeks to attract investment and technology through trade pacts, especially with smaller nations offering built-in FDI requirements.
These discussions highlight India’s proactive approach to economic growth, international trade, and investment attraction, aiming to position the country as a top global investment destination.
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