Tesla entry spurs Mahindra’s call for fair play in India’s electric vehicle sector

India, with 4 million cars sold last year, witnessed only 82,000 electric vehicles on its roads. Despite the relatively small market share, the EV segment experienced a remarkable 115% sales growth compared to the previous year.

Indian automaker Mahindra & Mahindra has urged the government to ensure a level playing field between domestic and foreign players in the electric vehicle (EV) market. The call comes as the Indian government considers policies to attract international carmakers, including Tesla, to set up operations in the country.

According to a top executive from Mahindra & Mahindra, the company emphasized the importance of promoting local manufacturing and maintaining equality between domestic and foreign players. The plea aligns with reports that both Mahindra and Tata Motors have privately urged Indian officials not to reduce the existing 100% import taxes on electric vehicles, aiming to protect the interests of domestic firms and their foreign investors.

Mahindra’s Managing Director, Anish Shah, discussed the company’s perspective on Tesla’s potential entry into the Indian market during an interview at the World Economic Forum annual meeting. While not explicitly mentioning Tesla, Shah stressed the need for a level playing field and encouraged global EV manufacturers to invest in India. He stated that the company’s approach is essentially to foster a more robust industry in India, steering clear of a scenario where manufacturing occurs outside the country, and India merely assumes the role of an importer of products.

India, with 4 million cars sold last year, witnessed only 82,000 electric vehicles on its roads. Despite the relatively small market share, the EV segment experienced a remarkable 115% sales growth compared to the previous year. As electric mobility gains traction, both Mahindra and Tata Motors have attracted significant investments. Mahindra secured around $400 million from Singapore’s Temasek and British International Investment, while Tata Motors received a $1 billion investment in 2021 from private equity firm TPG and Abu Dhabi state holding company ADQ.

Shah disclosed that Mahindra has plans to list its electric vehicle unit but not before 2029, emphasizing the need to demonstrate substantial success in the EV business. He asserted, “For us, electric is the future.”

Tesla, on the other hand, has proposed establishing a manufacturing facility in India but has also called for lower import taxes on electric cars. The Indian government is reportedly working on a new policy to reduce import taxes on EVs to as low as 15% for companies committing to local manufacturing. However, concerns have arisen within the Indian industry about the potential impact of Tesla’s entry on the fundraising prospects of local EV companies. Stability and favorability in the import tax regime are seen as crucial for the continued growth of the Indian EV sector.

Mahindra’s call for a level playing field underscores the complex dynamics at play, while Tesla’s potential influence on import tax policies adds a layer of complexity to the ongoing discussions shaping the future of electric mobility in the country.