|Prime Minister Narendra Modi has asked government departments to resolve all differences and clear obstacles to Tesla’s Entry into India by the earliest. |
An official announcement can be made during Joe Biden’s possible visit to India on 26th January 2024.
Tesla wants India to reduce import duty from 60% for vehicles priced below $40,000 to 40%.
Tesla is all set to make an entry into the Indian market in early 2024. The speculations have been high ever since Prime Minister Narendra Modi met with Tesla’s CEO Elon Musk during his visit to the United States in June 2023.
Recently, PM Modi chaired a meeting to assess the next phase of Electric Vehicle manufacturing in India. Tesla’s investment proposal was also heavily discussed during this meeting.
The government of India has asked its officials to streamline all clearances as soon as possible so that Tesla can get all the necessary permissions by January 2024.
India has also extended an official invitation to Joe Biden to be the chief guest of India’s Republic Day celebration on 26 January 2024. Tesla’s investment is going to be huge because they are going to set up manufacturing facilities in various locations in the country.
Timeline of Tesla’s Plan to Enter the Indian Market
Tesla has been trying to sell its electric cars for many years in India, which is the 3rd largest automobile market in the world.
However, issues like high import duties have been hindering the company’s ambitions. Earlier, they were planning to start its operation in India in early 2021.
The company even got itself registered as Tesla India Motors and Energy in Bengaluru. Unfortunately, their plans got shelved.
Here is how the story of Tesla in India has progressed so far.
|2019||Replying to a user on Twitter, Elon Musk expressed his interest in establishing a base in India. He said he would love to be in India, “this year. If not, definitely next!”|
|2020||Elon Musk again answered a question asked on Twitter about the progress of his Indian plan. This time, he said, “Yea next year for sure”.|
|2020 (December)||Union Minister Nitin Gadkari said Tesla will begin its operation in India in early 2021.|
|2021 (January)||Tesla registered its Indian branch – Tesla India Motors and Energy in Bengaluru and also appointed its three directors.|
|2021 (February)||Then Chief Minister of Karnataka BS Yediyurappa announced that OEM will open its 1st factory in the state and an R&D facility in Bengaluru.|
|2021 (March)||Nitin Gadkari said that the government is ready to offer Tesla some incentives to reduce the production cost.|
|2021 (April)||Tesla finalised a location in Mumbai’s Lower Parel area to open its retail store.|
|2021||Tesla asked government officials and Niti Ayog to reduce taxes on fully assembled cars to 40% for those with a price less than $40,000.|
|2021||The Government of India gave permission to Tesla to launch as many as seven models in the country. However, tax rates were not slashed.|
|2022||Ministers of Telangana and West Bengal invited Tesla officials to set up factories in their respective states.|
|2023 (May)||Senior officials of Tesla met PM Narendra Modi with a new offer to set up a Giga factory in India. They also said that the cars manufactured in India will also be exported to other Asian countries.|
|2023 (June)||PM Modi met Elon Musk for the second time during his official visit to the US.|
|2023 (November)||The government of India asked officials to fast-track Tesla’s entry to India.|
Major Contention Points and Challenges in the Deal
Tesla’s entry can be a game-changer in the Indian EV Ecosystem. However, the deal between Tesla and the government is stuck due to the following points.
High Import Duty in India is the main reason that is stopping Tesla in India. Reportedly, Tesla has asked the government of India to reduce the Import duty to 40% of fully assembled cars.
In February 2022, Vivek Johnri, Chairman of India’s Central Board of Indirect Taxes and Customs, gave a blow to Elon Musk’s plan by saying “Rules don’t allow rejigging the tax structure. Tesla should import partially built models and assemble them locally to reduce cost”.
Establishing of Manufacturing Units
Tesla doesn’t want to establish a manufacturing unit in India before they start selling vehicles in the country. On the other hand, the Indian government wants to give a boost to its Make in India initiative and wants the company to establish manufacturing hubs in the country.
EVs vs Luxury Vehicles
The current tax rules in India don’t differentiate between an electric vehicle and a fuel-driven vehicle if their cost is more than a certain price point. Tesla wants the government to consider its cars as EVs, not luxury cars.
Check How to Contact Elon Musk
Why Tesla Wants to Enter the Indian Market?
There are many reasons why Tesla is looking to make an entry into the Indian market.
- Huge Market – India is officially the most populous country on earth with a growing middle class. Tesla sees this as a great opportunity and an untapped market. So, they want to take advantage and sell its popular cars. Apart from Tesla, Audi and Mercedes are also looking to capture this market.
- Government Policy – The Indian government has shown commitment to replacing petrol-diesel vehicles with EVs by 2030. So, it is the perfect time for manufacturers to invest in the country.
- Lower Production Cost – Tesla is also eying the skilled labour force of India which is available at a far lower price. Once the manufacturing unit is established, the production cost of Tesla in India will be less than in most countries.
Benefits of Tesla’s Investments
There are numerous factors why the government of India wants Tesla to start manufacturing cars in India. Let’s discuss a few of them.
- Economic Growth – Tesla’s presence would boost India’s economy and present it as a global competitor to China.
- Job Opportunities – India is a country that is facing crises due to unemployment. Local manufacturing would create employment opportunities for skilled workers in the automotive industry.
- Export Potential – Tesla already announced that they will export “Made in India” cars to other Asian countries. This will help India improve its trade deficit.
- Environment Factors – Many cities in India like Delhi, and Mumbai are facing problems of hazardous air pollution. Tesla’s electric cars can contribute to a cleaner and greener environment in India.
- Improved Infrastructure for EVs – Electric Vehicles require good Infrastructure to succeed in a country. Tesla’s entry will improve infrastructure facilities like charging stations and more.
Rise in Electric Vehicle Sales in India Over the Years
The Electric Vehicles ecosystem is flourishing in India. The following data extracted from Parivahan Sewa of the Ministry of Road Transport is a testament to the same.
|Year||Number of electric four-wheelers sold in India|
Frequently Asked Questions
Electric Vehicles, Batteries, and Charging Stations.
Currently, Tesla has factories in the US, Europe, and China.
More than 9 million
Due to high import duties by the government of India.
It is expected that Tesla will start selling EVs in India by early 2024.
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