Will Tesla and India Mend Ways? High-Profile Team to Visit India for Talks

Taking a leaf out of Apple's playbook, Tesla is revisiting its India plans, with a series of high-level meetings scheduled to take place this week in Indian capital New Delhi. The global electric car leader does not have a footprint in India, despite it being one of the biggest automobile markets in the world.

This might change soon if Tesla and New Delhi arrive at consensus in certain points of dispute that prevented the global EV leader's entry into the Indian market. Tesla founder Elon Musk had ruled out setting up a manufacturing plant in India as New Delhi has not given green light to selling Tesla's China manufactured cars in the country.

Tesla tesla

'Challenges with the Government'

"Tesla isn't in India yet due to "Challenges with the government," the Tesla CEO had said in a social media post earlier.

For Musk, it is important that any country where he would set up a Tesla plant must first give the right to sell and service Tesla cars. Musk had also picked up cudgels with the Indian government over the country's high import duties that effectively price Tesla out of the market by a wide margin.

Local Sourcing

Top level Tesla executives will meet Indian government officials including those from the office of Prime Minister Narendra Modi, according to Bloomberg News. Most of the discussions will revolve around local sourcing of components for Tesla cars. The Tesla officials will also request the Indian government to cut import taxes on Tesla cars.


Why Import Duty Changes are Crucial

As per the Indian policy currently, an import tax of 100 percent is slapped on a car manufactured abroad, if its price is above $40,000. For cars that cost less than $40,000, the import tax is 60 percent. This rate makes a Tesla car almost unaffordable in India. While Tesla's Model 3 is an eminently affordable car in the United States with a price tag of around $40,000, it becomes far more expensive than comparable models in India after the import tax.

India has adopted an aggressive EV policy, under which it aims to sell only electric cars by 2030. Being the global leader, Tesla is poised to play a great role in any emerging market, but the India scene is different.

Indian Prime Narendra Modi
Indian Prime Narendra Modi Wikimedia Commons

However, Tesla is keen on ironing out the differences given factors like the sheer size of the Indian market and the need to diversify beyond China when it comes to manufacturing. Apple, meanwhile, is ramping up its operations in India. The manufacture of Apple products in India tripled in about a year, new data has shown, indicating that the country has emerged as the new powerhouse in the technology supply chain. The iPhone maker assembled products worth more than $7 billion in India the last fiscal year. .

As of now Apple manufactures 7 percent of iPhones in India, which is a huge jump from around 1 percent in 2021. Apple's manufacturing partners Foxconn and Pegatron are also makig new investment in India, which will increase the India output of Apple products.

Related topics : Elon musk