Tesla's duty cut proposal is under inter-ministerial review: Amitabh Kant

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Kant said the challenge is Tesla models are not capable of being assembled, they come in a particular form but discussions are on with the company.

"India's objective is to ensure Tesla makes in India for the world. However, the US company wants to test the market first to decide to invest in India," he added.

Currently, India levies 100 percent tax on imported cars of price more than $40,000 (Rs 30 lakh) inclusive of insurance and shipping expenses, and cars less than $40,000 are subject to 60 percent import tax.

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Earlier in a letter to the road ministry in September, the US firm had stated that the effective import tariff of 110 percent on vehicles with customs value above $40,000 is "prohibitive" to zero-emission vehicles. It has requested the government to standardize the tariff on electric cars to 40 percent irrespective of the customs value, and withdraw the social welfare surcharge of 10 percent on electric cars.

It has been stated that these changes would boost the development of the Indian EV ecosystem and the company will make significant direct investments in sales, service, and charging infrastructure; and significantly increase procurement from India for its global operations.

The company has argued that these proposals would not have any negative impact on the Indian automotive market as no Indian OEM currently produces a car (EV or ICE) with ex-factory price above $40,000 and only 1-2 percent of cars sold in India (EV or ICE) have ex-factory/customs value above $40,000.

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Union minister Nitin Gadkari had said Tesla has a golden opportunity to set up its manufacturing facility in India given the country's thrust on e-vehicles.

Tesla is already sourcing various auto components from Indian automakers and setting up base here would be economically viable for it, the road transport and highways minister had said.