Elon Musk’s electric car manufacturer Tesla has agreed to the government’s suggestion to set up a vendor base in India. The company has been asked to begin the assembly of electric cars in India, followed by setting up the vendor base, reports Financial Express. Currently, more than half of Tesla’s global production takes place in China.
As per the report, Tesla has stopped pressing the govt for lowering the import duty on completely built-in units, which is at 100 per cent for cars costing $40,000 and more. For cars costing less, the import duty is at 60 per cent. Earlier, Tesla was demanding the Indian govt to slash it down 40 per cent.
Tesla shifting vendor base from China to India
It is reported that if Tesla decides to start manufacturing in India, it will have to relocate its vendors from China to India. These vendors will have to form joint ventures with Indian firms in order to kick-start the production.
For this to work, Elon Musk will have to drive a hard bargain with India as China wants Musk to retain Tesla's investment in the country. For the unversed, Elon Musk recently visited China and met with some of the top leaders.
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Is Tesla getting concessions in India?
The government has refused to give any special incentives to Tesla as of now. However, the state governments are allowed to offer concessions, the report added. Moreover, the centre is ready to offer import concessions on the components till it sets up its supply chain in the country. Govt offers such production-linked incentives for smartphone manufacturers, like Apple.
The Indian government has asked Tesla to submit a roadmap on the timeline for setting up the indigenous supply chain. As per the report, Tesla is likely to submit the report in the next three to six months.
According to the report, officials have told the Tesla team, that visited India last month, “The government is willing to give time for setting up a domestic vendor base but Tesla will have to indicate a period by which the duty concessions on components granted to it will come to an end.”
PLI scheme in India
Smartphone manufacturers, Apple and Samsung, with the PLI scheme get duty protection on components required for domestic assembly of the handsets. The catch is, they need to start sourcing them locally within the given timeline.
The report suggests that once Tesla agrees to set up its manufacturing plant in India, along with the required timelines, the govt is likely to modify the PLI scheme for electric vehicles and advanced chemistry cell battery.
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