India might contemplate permitting foreign vendors of Tesla, specifically those in China, to produce essential components within the country. However, the government is not inclined towards granting special exemptions exclusively for Tesla or any other specific company.
This development carries significance due to the fact that certain crucial components required for electric vehicles, such as battery cells, are presently imported from China.
Tesla has conveyed its interest in establishing its own supply chain ecosystem in India. If there are critical parts vendors that need to be brought in, it is a possibility, but there won’t be any tax incentives tailored specifically for a single company, as per a media report.
It’s worth noting that India had previously granted special concessions in foreign direct investment clearances to Apple, aiding the shift of its Chinese vendors to India. Likewise, some concessions could be contemplated for Tesla’s import of critical parts.
The Indian government has already introduced schemes like Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) and production-linked incentives for automobiles and advanced chemistry cells to foster the growth of electric vehicle manufacturing in the country.
Discussions have been ongoing between the ministries of commerce and industry and electronics and information technology regarding Tesla’s plans after the company’s CEO, Elon Musk, met with Prime Minister Narendra Modi during his state visit to the US in June.
Tesla executives have engaged in discussions with the Indian government regarding the establishment of car and battery manufacturing facilities in the country.
Although Tesla is eager to sell its cars in India, the government has not acceded to their request for lower import duties, instead suggesting that Tesla produce vehicles locally. Tesla had sought a 40 per cent import duty on fully assembled electric cars, compared to the current rate of 60 per cent for cars priced below USD 40,000 and 100 per cent for those above that threshold.
The individual involved in the discussions emphasised that the government’s approach is industry-specific and not focused on any particular company, clarifying that any incentives granted will apply equally to domestic and foreign investors.
Tesla, known as the world’s largest electric vehicle manufacturer, has manufacturing facilities in various countries, including China, Germany, the US, Canada, Mexico, and the Netherlands.
