India pushing for Elon Musk's Tesla investment with January 2024 approval deadline: Report

In a concerted effort to attract Elon Musk's Tesla to India, government departments are working diligently to provide all necessary approvals by January 2024, as reported by ET. This move comes in the wake of a high-level meeting at the Prime Minister's Office on Monday, during which the next phase of electric vehicle (EV) manufacturing in the country, including Tesla's investment proposal, was discussed.

While the meeting primarily focused on general policy matters, a top official revealed to ET that fast-tracking approvals for Tesla's proposed investment in the country by January 2024 was a prominent agenda item. The Ministries of Commerce and Industry, Heavy Industry, and Electronics and IT have been engaged in discussions about Tesla's plans ever since CEO Elon Musk met with Prime Minister Narendra Modi during his state visit to the United States in June.

Senior Tesla executives have reportedly been in talks with the Indian government to establish car and battery manufacturing facilities in India, with the EV manufacturer expressing a keen interest in bringing its supply chain ecosystem to the country. A second official disclosed to ET that various ministries and government departments have been instructed to resolve any differences with Tesla and expedite the announcement of the company's India manufacturing plan.

Import Duty Conundrum

Tesla had previously sought a 40% import duty on fully assembled electric cars, as opposed to the existing rate of 60% for vehicles priced below $40,000 and 100% for those above this threshold. India's customs duty regime treats electric cars and hydrocarbon-powered vehicles alike, imposing high duties to encourage local manufacturing. Tesla is advocating for its cars to be classified as electric vehicles rather than luxury cars.

The import policy may see the introduction of a new category to ensure lower taxation for clean energy-driven vehicles. This incentive, according to the first official, would not be exclusive to Tesla but open to anyone committing to establishing electric vehicle manufacturing units.

Tesla had initially abandoned its plans for India due to challenges in negotiating import duty reductions. The Indian government insisted on a commitment to local manufacturing in exchange for any import duty concessions and encouraged the company to apply for the production-linked incentive scheme, which offers direct subsidies to manufacturers.

Cheaper Tesla Model 2 In The Works?

Amid these developments, Reuters reported that Tesla is also planning to produce a 25,000-euro (Rs 22.3 lakh) car at its factory near Berlin. This will mark a significant step for the electric vehicle manufacturer, which has long aimed for mass adoption of its cars. Musk had previously shelved plans for a more affordable electric car in 2022, but sources indicate that the company is now making progress in developing technology that could revolutionise production processes and reduce costs.

For Tesla, expanding into the mass market is crucial for achieving its goal of delivering 20 million vehicles by 2030, setting it apart from competitors like Volkswagen, which have focused on protecting profit margins during the transition to electric vehicles.

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