News Brief

Centre Seeks Details On Tesla's Manufacturing And Investment Plans Before Its Debut In India

Bhaswati Guha Majumder

Sep 11, 2021, 02:59 PM | Updated 02:59 PM IST

Tesla CEO Elon Musk
Tesla CEO Elon Musk
  • Prime Minister Narendra Modi’s “Make in India” initiative, which aims to boost the manufacturing sector, has welcomed international investors if they increase domestic production.
  • While Tesla is getting close to making its debut in India after receiving approval to produce or import four models in the country, automakers around the world are monitoring how New Delhi reacts to the company's demand for lower tariffs and company's strategies for the Indian automobile market.

    According to Business Standard, a senior government official has revealed that the Centre has asked billionaire Elon Musk’s automobile manufacturing company to share its manufacturing and investment plans in the country.

    Tesla met with top government officials about a month ago and the California based electric vehicle maker was requested to submit its proposal in detail.

    The source said: “We want Tesla to do business in India. But the relation has to be reciprocal. India should gain in terms of investment, employment.”

    The world's largest electric car manufacturer had received the licence to sell four models in India as of the end of August. Although no release dates or prices have been disclosed, it is expected that electric vehicles would be accessible in the country by the end of the year.

    Getting a footing in India's automotive market will be difficult, given that electric vehicles account for only 1 per cent of the country's yearly car sales and Tesla vehicles are extremely pricey.

    Tesla CEO Musk plans for initial sales in India to consist of imported vehicles. However, since news about Tesla's local operation in Bangalore leaked, media sites have speculated that the company aims to produce cars in India as well.

    In late July, Musk said on Twitter: "If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely."

    While Musk hinted at an Indian plant, which would provide a boost to the country's economy, he also encouraged the Indian government to make concessions, specifically on the country's high tariffs on electric vehicles, that range from 60 to 100 per cent.

    Musk also responded to a tweet saying that India's "import duties are the highest in the world by far of any large country!". However, he also noted that Tesla is "hopeful that there will be at least a temporary tariff relief for electric vehicles".

    Tesla's proposal for a tax deduction on imported electric vehicles received a mixed response. The move has the support of Volkswagen AG's India unit and Hyundai Motor India Ltd., while Mahindra & Mahindra Ltd. has called for a reassessment of import duties as well as lower domestic levies.

    In August, Tata Motors Ltd. Chief Financial Officer P.B. Balaji said the government should keep the existing electric vehicle subsidy plan, which emphasises localization and affordability of electric vehicles.

    The Indian government has stated that it does not intend to reduce import tariffs on electric vehicles.

    According to Krishan Pal Gurjar, who was just appointed into the cabinet as the Minister of State in the Ministry of Power and Heavy Industries, the Centre has no proposal to smoothen Tesla's entry into India. He also added that the government is however taking steps to promote the use of electric vehicles by lowering domestic taxes and adding charging stations.

    Prime Minister Narendra Modi’s “Make in India” initiative, which aims to boost the manufacturing sector, has welcomed international investors if they increase domestic production.

    India subsidises electric vehicles, with the goal of having them account for around 30 per cent of all new vehicles sold in the country by 2030, up from less than 1 per cent now. Suzuki Motors, India's largest passenger car seller, plans to introduce electric vehicles by 2025.

    The Indian government is striving to modernise the country's electrical mix, which now relies heavily on coal. Electric vehicles are crucial to India's high-tech and environmental ambitions, which will be aided by the growing usage of renewable energy sources.

    As per recent reports, the union government has decided to provide approximately $3.5 billion in incentives to automakers over five years as part of a revised scheme to boost the manufacturing and export of clean technology vehicles.

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