Why Elon Musk's India visit is a pivotal moment for India's tech ecosystem

Elon Musk is set to visit India and meet Prime Minister Narendra Modi later in April

Tech mogul Elon Musk is set to visit India on April 21 and April 22, marking his first visit to the country at a time when the billionaire is looking to kickstart operations of his two companies, Tesla and satcom internet provider Starlink, in the subcontinent.

Musk, who is also the owner of microblogging platform X,  will be meeting Prime Minister Narendra Modi during his visit.

The development has generated a lot of excitement, especially surrounding the possibility of Musk announcing investments in the country. With general elections around the corner, any announcement in this regard may bolster Modi's business-friendly credentials as he looks to secure a rare third term.

Musk's visit to the country also comes at a time when India's technology and electronics ecosystem is at an inflection point, with the passage of the new data protection and telecom law, and the government approving several semiconductor investment proposals, in a bid to make the country self-reliant in this area.

Four reasons why Musk's visit to India is important

Tesla in India soon? In March, the Indian government unveiled a new electric vehicle (EV) policy, lowering import taxes, but with additional conditions. The high import taxes prevailing earlier was a thorn in the side for Musk, who views Tesla's entry into India "as a natural progression".

India reduced EV import duty from 100 percent to 15 percent, provided a manufacturer invests at least $500 million and sets up a unit in India.

With these developments in context, and with speculations rife about the US company's planned investments in the country, various state governments will be keenly looking to pitch to the billionaire about setting up shop in their respective states.

For instance, TRB Rajaa, Tamil Nadu's minister for industries, recently said that the state government will aggressively pitch itself as a manufacturing site for Tesla.  The state is already home to the manufacturing facilities of Nissan Motor Co, Renault SA, Hyundai Motor Co and BMW AG.

According to a report, Tesla has also signed a strategic deal with Tata Electronics to acquire semiconductor chips for its worldwide operations, indicating that Tesla will be interested in building a supply chain in India that goes beyond local revenue-generation.

Starlink soon to get greenlight? Starlink has been seeking a piece of the Indian satcom market from 2022, ever since it planned to conduct trials for its services, but faced regulatory hurdle as it did not have permission.

Later in 2022 itself, it initiated the process of securing a global mobile personal communications by satellite services (GMPCS) licence, for offering its services.  However, due to various security-related reasons, its licence request has been in a limbo.

In December 2023, India cleared a major regulatory hurdle on satellite spectrum -- the segment of radio spectrum over which satcom signals are transmitted.

Through the Indian Telecommunication Act 2023, which replaced the century-old Indian Telegraph Act, the government decided that the satcom spectrum, which is necessary for providing satcom internet services, will not be auctioned, and will be administratively allocated.

Now, with these regulatory hurdles smoothened, and with Musk arriving in the country on April 21, Moneycontrol understands that the Department of Telecommunication has accelerated the process of allocating the licence to Starlink.

“Due diligence is in an advanced stage, and DoT is having inter-ministerial discussions because of a security issue," a senior government official told Moneycontrol. After DoT's approval, Starlink will also need permission from the home ministry, law enforcement and other security agencies.

X's appeal in Karnataka High Court: In June 2022, the Ministry of  Electronics and Information Technology (MeitY) served notices to X (then Twitter), accusing it of not complying with IT Rules 2021, for not enforcing its blocking orders in their entirety.

In these notices, MeitY had warned X that if it does not comply with these orders, the safe harbour provision that the platform enjoys under the IT Act can be revoked. The safe harbour provision protects platforms against liability from content posted by users.

A few months later, X sued the Indian government, saying that MeitY did not provide sufficient reasoning behind these blocking orders. This case went for nearly a year, and in June 30, 2023, the Karnataka HC dismissed  X's petition and imposed a Rs 50 lakh penalty on the platform.

While this was happening, X also saw a much-publicised takeover of the platform by Musk. In fact, in court hearings pertaining to the takeover, Musk had termed X's legal battle against the Indian government as a "risky litigation" that placed "the social media firm's third largest market at risk".

Thus when X, after the takeover by Musk, appealed against the decision of the Karnataka HC, it came as a surprise. It marked X's first confrontation with the Indian government since Musk took ownership of the platform.

When it comes to India specifically, Musk, who is known for being a free speech absolutist, has toed a cautious line, regarding the country's laws and regulations. Earlier, he had said that India’s social media rules were “quite strict” and violating them may result in X’s employees getting arrested. With this in context, Musk meeting Modi gains further significance.

Will SpaceX find its wings in India? Over the last couple of years, the Indian space sector has opened up. The Indian Space policy was released in 2023, and recently, the government eased foreign direct investment (FDI) norms in the sector.

The policy boost has propelled several Indian space tech startups to go for their own launches. For instance, Hyderabad's Skyroot Aerospace launched a rocket in 2022 to become the first Indian private player to do so. Several other startups, such as Pixxel, Digantara, and Dhruva Space, have launched their satellites and payloads into space.

However, its not just startups which are eyeing a piece of the space tech market. It has been pegged to reach $916.85 billion by 2033.

Moneycontrol understands that major players, such as the Jeff Bezos-owned Blue Origin,  which, like Musk's SpaceX, offers launch services, among other things, have been in touch with Indian authorities in this regard.

Moneycontrol had earlier reported how Blue Origin held multiple meetings with the Indian government and startups over the last two years, exploring manufacturing tie-ups.

With this in context, a possible entry of SpaceX, which is know for offering cheap launches, into the Indian market may not be as far-fetched as one may think.

If that happens, the rocket launch ecosystem in India, which is currently dominated by the Indian Space Research Organisation (ISRO), again known for offering low-cost, yet highly effective launches, and startups like Skyroot or Agnikul, which have assured that their offerings too would be cheap, will transform to a highly competitive market.