Tesla’s entry into India is a subject that has been in the news for a long time now. Despite its strong presence in international markets, the American EV manufacturer has faced several hurdles to enter into the Indian market. After officially registering itself in the country last year, Tesla’s talks with the Indian government stalled.
The primary contention between the two parties was Tesla seeking government concession for bringing imported models to India which wasn’t acceptable to the latter. It now seems Tesla might find its way to the Indian market soon. It appears that Tesla afterall can sell its full-imported models in India via the CBU route.
Tesla in India
According to a Bloomberg report, the Government of India is closing in on an agreement with Tesla Inc. As per the new agreement, the US automaker will be able to ship its electric cars to the country from next year and set up a factory within two years. Negotiations between the Indian government and Tesla resumed earlier in May this year. Earlier this month, Union commerce minister Piyush Goyal visited Tesla’s California-based manufacturing facility.
An official announcement regarding the same is expected at the Vibrant Gujarat Global Summit, which is scheduled to take place from January 10-12, 2024. At the moment, Gujarat, Maharashtra and Tamil Nadu are being considered for the factory as these three states have relatively well-developed ecosystems for making EVs. Moreover, all three states have well established ports which aid the company in exports.
Tesla manufacturing, battery assembly facility in India
The Bloomberg report further reveals that in order to set up a manufacturing plant in India, Tesla would have to commit a minimum investment amount of USD 2 billion (equivalent to Rs 16,665 crore). The American EV brand is also looking at increasing the purchase of Indian auto parts to USD 15 billion (approximately Rs 1.2 lakh crore).
No final decision has been taken by Tesla yet but the company’s CEO, Elon Musk, had said in June that the company plans to make a “significant investment” in India; he also intends visiting the country in 2024. The US automaker would also seek to make some batteries in India to bring down costs.
Lower tax rate for EV imports
After initial disagreements, India is now said to be considering lowering import taxes for international EV manufacturers for a period of five years if those firms eventually commit to setting up local factories. This move could propel Tesla to launch its first model in India as soon as 2024.
This would allow Tesla and other foreign EV makers to start business in India while laying the groundwork for local manufacturing operations in the country. According to Bloomberg, when Tesla’s first made-in-India models go on sale, they could be sold for as little as USD 20,000 (approx. Rs 16.67 lakh).
