MC Exclusive: Govt considering Tesla's request for benefits to set up testing hub

Tesla is seeking to set up testing tracks for all models of vehicles.

The world's largest electric car producer, Tesla Inc., has sought benefits from the government of India to set up destructive testing for specific components and testing tracks for all vehicles in the country, which the government is mulling over. The government feels there will be benefits in bringing the concept industry to the country, but there is room for a lot of negotiations, a senior government official said.

“Tesla has proposed to set up innovation and destructive testing hubs for specific components in India. India has the largest variety of roads. If Tesla conducts destructive testing in India, the company can roll out its cars anywhere in the world. Tesla has discussed this with the Indian government and has been asking for some benefits. India has been considering that,” the official told Moneycontrol.

The testing tracks and destructive testing are cost-intensive and skillset-intensive initiatives. However, they could bring benefits to India and the automobile ecosystem in terms of technology and innovation.

Destructive testing is a method of destroying a component or material to analyse its point of failure. In this technique, a component is subjected to different destructive methods to deform it completely. Its flexibility and strength are then assessed to understand how that material performs under pressure.

“Tesla is seeking to set up testing tracks for all models of vehicles. It is space-rich, skillset-rich, and cost-intensive. In the Indian ecosystem, both labour-intensive and cost-intensive sectors work. The discussions between Tesla executives and the government have taken place on this matter. Bringing this concept industry to India will benefit the country,” he said.

India may look at offering some benefits if there is a model to scale it in the automobile sector. There is great scope for negotiations, and any decision will be taken by line ministries, including the Ministry of Heavy Industries, the Ministry of Electronics and Information Technology, and the Ministry of Road Transport and Highways.

“There is a lot of room to negotiate in this space. It is for the line ministries to take a decision,” the official said.

Currently, India has the National Automotive Test Tracks in Madhya Pradesh, including the High-Speed Track, the Multi-Friction Braking Track, the Gradient Track, the Fatigue Track, the Gravel and Off-Road Track, and the Comfort Track. It's a flagship project of the Ministry of Heavy Industries.

Manufacturing unit

Meanwhile, on reports of Tesla looking at setting up a manufacturing unit in India, the official said that the government has concerns about the quantum of labour and employment the facility may need, as the high-tech electric car assembly lines tend to be vastly automated.

On the speculation of tax benefits to Tesla for electric cars, the official reiterated that the government is not looking at concessions towards high-end electric vehicles (EVs).

“EVs for use by the common people or by the new generation will receive tax benefits. High-end EVs will not get tax benefits. However, the tax benefits already given by the government to EVs have been substantial. Why should we give any more?” he said.

Tesla manufactures high-end electric cars costing over $40,000 and is continuously innovating towards auto-pilot features and concept cars.

“The US-based electric vehicle maker is into driverless cars, high-end EVs, concept vehicles, etc. "Until the concept is proven and there is a cost-benefit association, the government does not enter the scene to give them tax concessions for manufacturing or imports,” he said.

Emails for comments to the Ministry of Finance Ministry, the Ministry of Heavy Industries, and Tesla remained unanswered.