MC Exclusive: India waiting to see what Tesla offers; value additions vital for sops: Govt official

Tesla last year had been asking for reduction of import duty on electric cars for access to Indian markets.

With a team of Tesla executives slated to meet officials in the Prime Minister’s Office (PMO) besides top officials from the finance and heavy industries ministries on May 17 and 18, a senior government official said that they will evaluate what the electric car major has to offer for the Indian market. Timelines and value additions that they bring will be major criteria in deciding if any concessions will be given to the company.

“Tesla executives will be meeting with officials in the PMO. They will also meet with officials of the ministries of finance and heavy industries, and the NITI Aayog. We will listen to what they are offering for the Indian market, which is huge. Their plan must have something to benefit the Indian market,” the official told Moneycontrol.

Any concession that the government decides on will not be exclusive to Tesla, but will be for the entire electric vehicles (EV) sector, he pointed out. These concessions could be on the basis of the project, the timelines, and value-additions. The official said Tesla may seek concessions for initial import of machinery and manpower. However, it will all boil down to what it is offering to the massive Indian market, he said.

According to him, if Tesla offers to set up a research and development (R&D) facility or a centre of excellence (CoE), then India would not need to think much, but could agree immediately.

“We have to analyse the implications of what Tesla asks for. If they are offering to set up a battery manufacturing unit, charging stations infrastructure or a manufacturing unit, discussions will continue even after their visit and then we will arrive at a decision,” he said.

Last year, Tesla had sought a reduction in import duty on electric cars to India. Tesla cars priced above $40,000 attract 100 percent import duty in India, and the cheaper ones, 40 percent. Tesla has been saying that India has one of the highest import duties in the sector globally. India had earlier refused to lower the duties, but said it would be interested if Tesla set up an automobile manufacturing unit and provided employment in the country.

The discussions with Indian officials are likely to revolve around the possibility of local sourcing of components for Tesla's car models, as the company looks beyond China.

This visit could mark a significant turning point in the relationship between India and Tesla, as the EV manufacturer is yet to establish a notable presence in the country. By engaging with Indian authorities, Tesla aims to pave the way for potential future operations in one of the world's largest automobile markets.

India has been actively promoting the adoption of EVs to combat air pollution and reduce dependence on fossil fuels. With the Indian government's push towards electric mobility, Tesla's entry into the market could offer an attractive proposition for both parties.

Expanding its supply chain in India would not only allow Tesla to diversify its operations away from China, but also align with the government's 'Make in India' initiative, which encourages domestic manufacturing and sourcing.