Tesla to Set Up Shop in India: Elon Musk Calls Entry a “Natural Progression”

Elon Musk today said it will be a natural progression for Tesla to provide electric vehicles in India.

Musk’s statement came amid reports about Tesla scouting for a location to set up its factory in India.

News wire agency ANI quoting sources earlier said that Maharashtra and Gujarat have extended lucrative land offers to Tesla Inc. for the establishment of an electric vehicle (EV) manufacturing plant. Telangana govt too is also said to be in talks with the EV giant for the same.

With a projected expenditure of between $2 billion and $3 billion, the proposed facility seeks to meet the demand for Tesla’s electric cars on the domestic and foreign markets.

The Indian government unveiled a new EV policy earlier this year, opening the door for Tesla to enter the nation.

Several important goals are listed under the government’s EV strategy, which intends to position India as a preferred manufacturing destination for EVs outfitted with cutting-edge technology.

These include attracting investments from reputable global EV manufacturers, fostering the adoption of advanced EV technology among Indian consumers, and bolstering the country’s Make in India initiative.

By setting a minimum investment threshold of Rs 4150 crore (approximately USD 500 million) and encouraging manufacturers to achieve significant levels of domestic value addition (DVA), the government mandates that by the third year of setting up the manufacturing unit, at least 25 percent of the parts used to make the vehicles should be sourced from within India. This localization level is expected to increase to 50 percent by the fifth year of operation.

For vehicles valued at USD 35,000 or more, a 15 percent customs duty will be imposed for five years if the manufacturer builds manufacturing facilities in India within three years.

The total number of EVs allowed for import will be limited based on the investment made or Rs 6484 crore, whichever is lower. If the investment exceeds USD 800 million, a maximum of 40,000 EVs can be imported, with no more than 8,000 per year.

Unused import limits can be carried over to future years. Tesla’s entry into the Indian market holds immense promise for the country’s economy and environment. The establishment of a manufacturing plant and increased procurement of auto parts from India will create jobs, foster economic growth, and bolster the domestic manufacturing ecosystem.