This is significant because certain crucial parts of electric vehicles, such as battery cells, are currently imported from China.
Tesla has shown interest in establishing its own supply chain ecosystem in India. “In principle, if there is any critical parts vendor that needs to be brought, it can be considered. However, no tax incentive can be given to one company,” stated an informed individual.
India has previously provided special dispensation in foreign direct investment clearances to Apple, assisting in the shift of its Chinese vendors to India. There is a possibility of some concessions being considered for the import of Tesla’s vital components, according to the individual.
The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME), as well as the production-linked incentive schemes for automobiles and advanced chemistry cells, have been implemented to encourage electric vehicle manufacturing in India.
Discussions have been held between the Ministry of Commerce and Industry and the Ministry of Electronics and Information Technology regarding Tesla’s plans following CEO Elon Musk’s meeting with Prime Minister Narendra Modi during his state visit to the US in June.
Senior executives from Tesla Inc have engaged with the government to discuss their plans for establishing car and battery manufacturing facilities in India.
While the electric vehicle manufacturer is eager to sell its cars in the country, the government has not accepted its request for lower duties. Instead, it has suggested that Tesla produces vehicles locally. Currently, Tesla desires a 40% import duty on fully assembled electric cars, while the current rate is 60% for vehicles priced below $40,000 and 100% for those above that threshold.
“Our approach is industry-specific and not company-specific,” the individual stated, adding that any incentives would be applicable to both domestic and foreign investors equally.
Being the largest electric vehicle manufacturer globally, Tesla operates factories in China, Germany, the US, Canada, Mexico, and the Netherlands.