Tesla receives clear message from top official regarding local market: ‘If it manufactures locally, it will get concessions’

A top Indian official had strong words for Tesla regarding its bid to enter the Indian market: manufacture here or stay home.

“We welcome Tesla to India,” the country’s Minister for Road Transport Nitin Gadkari told The Economic Times. “If it manufactures locally in India, it will get concessions … But if you make it in China and want to sell in India, then there is no concession policy available.”

Tesla has been in ongoing negotiations with the Indian government about establishing car and battery manufacturing facilities in the country, but settling on an import duty structure has proved challenging. Tesla requested a 40% import duty on fully assembled electric cars in lieu of existing rates of 60% for vehicles priced below $40,000 and 100% for those priced above that.

India is now considering cutting import duties on electric vehicles to as low as 15%, but with one caveat: Carmakers must commit to commencing manufacturing operations in India and increasing local sourcing for parts.

Tesla seemed up for the challenge, with the country’s commerce and industry minister Piyush Goyal saying the company will source around $1.9 billion worth of auto parts from the nation in 2023.

India’s office of the prime minister had a meeting with the country’s top officials in November 2023 to discuss the next phase of EV manufacture in the country, including fast-tracking approvals for Tesla.

India struggles with air pollution, so more EVs on the roads would be a welcome change. In early November 2023, smog choked New Delhi, forcing school closures. The administration announced that it would keep half of all vehicles off of the region’s roads between November 13 and 20 to help reduce pollution.

India’s EV market is steadily growing with automakers like Mahindra, which recently raised $145 million for its EV unit and expects EVs to account for 20-30% of its EV sales by 2027.

CNBC previously reported that Tesla was in talks with the Indian government to introduce an EV that would retail around $24,000. While the Mahindra CEO said the news did not faze his company, many people have commented that Tesla entering the Indian market will be a win-win for everyone.

“The arrival of an affordable Tesla would create more competition, which will force other EV brands to improve their products and price them more competitively,” The Times of India stated.

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