American electric vehicle giant Tesla reportedly agreed to the Indian government’s bid to also set up a vendor base in the country apart from employing a domestic car assembly.
Established Indian publication The Financial Express further reported that the government allowed Tesla to initially begin with domestic car assembly to build a presence in the country.
What’s the big deal?
Penetrating the Indian automotive market has been challenging for Tesla for many years now. The automaker demands import tax breaks, but India would not approve it.
In 2021, Tesla is just a few steps away from introducing its EVs in India. The automaker reportedly secured homologation certificates for seven vehicle variants, with Model Y spotted while testing on local roads. However, the Indian expansion did not push through in 2022 as the government refused to offer tax breaks for imported cars. Furthermore, 2022 reports suggest that the Musk-led automaker had already halted its Indian showroom search.
Finally, the Indian government and the world’s largest automaker seem to have a deal.
“The government is willing to give time for setting up a domestic vendor base, but Tesla will have to indicate a period by which the duty concessions on components granted to it will come to an end.”
Indian Government Officials
Interestingly, this vendor base plan would not be very different from Giga Shanghai’s case. Meanwhile, the import concession is basically the same as India’s incentive program for smartphones, providing companies with duty protection as long as they domestically source critical components.
The report also noted that some of Tesla’s vendors might need to have their own Indian facilities and form joint ventures with local firms, given that the government deters 100% Chinese-owned investments.
See Also:
- Tesla is “serious” about building a production base in India, minister claims
- India doesn’t want Tesla to Import Cars from China
- Tesla puts India entry plans on hold
- CEO Elon Musk follows Indian PM Modi, automotive space reacts
- Tesla’s affordable EV highlighted during Musk’s G20 interview
The Indian government reportedly requested Tesla to develop a roadmap to establish its domestic supply chain in three to six months.
All that said, Tesla must consider its present and potential vendors and suppliers, as well as the local supply chain and resources in India, as it develops its potential plan. Clearly, there are still a ton of specifics to work out.
