The topic of Tesla's much-awaited India entry featured prominently in an interaction that Prime Minister Narendra Modi had with Tesla Founder & CEO Elon Musk on Day 1 of his official state visit to the United States. Making his intentions to make significant investments in India clear, Elon Musk said that Tesla was looking to put money into India 'as soon as humanely possible' - as informed by CNN Business. However, Musk did not specify a clear timeline, though hinted at making a significant investment in the future as India remains a key market for Tesla.
While Tesla's push to enter India's growing EV market has been in the works for quite some time, Tesla's market entry in India was held back owing to some disagreements over local manufacturing requirements. The Indian government emphasised local production, but Tesla conveyed its intention to first test the demand by selling electric vehicles imported from production facilities in the US and China, at lower tariffs. But this resulted in more than a year of deadlocked talks with the local government.
In addition, Tesla also sought to reduce the import duties, but the Indian government urged Tesla to localise manufacturing before lowering tariffs on imported vehicles, potentially reaching as high as 100 per cent. Musk even took to Twitter in 2021 and expressed his intention to invest in India. However, recent developments in the U.S. show progress toward a mutually beneficial agreement between both parties.
— Narendra Modi (@narendramodi) June 21, 2023
During the discussion, PM Modi invited the electric vehicle maker to come to India and explore opportunities for investments in electric mobility and the commercial space sector, as told to the Press Information Bureau. Following the meeting, Musk expressed excitement about the future of India, while sharing his tentative plans to visit India next year.
In a fresh approach, Tesla officials last month came up with a proposal to set up an electric vehicle manufacturing facility in the country after previous talks ended in an impasse over high taxes on imported cars. According to some reports, Tesla also offered to establish a Gigafactory in India - aiming to manufacture electric cars locally that will also be used for exports in Asia and other markets. However, this talk also fizzled out.
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As of now, Tesla has one Gigafactory in the Asian market, which is based out of Shanghai. This factory, which is the largest car manufacturing plant outside the US, accounted for over half of Tesla's global sales in 2022. Other than China, Tesla is looking for other options to set up its manufacturing base, and India seems like a profitable option. In this direction, Tesla's recent engagement with PM Modi in the U.S. will be seen as a significant attempt to diversify beyond China as both India and China have been seeking global EV investment to boost the industry.