Tesla has moved closer to setting up a long-awaited manufacturing plant in India, after New Delhi lowered tariffs for foreign car manufacturers, according to the Financial Times. The Elon Musk-owned electric vehicle (EV) giant will this month send a team to scout locations for a proposed $3 billion facility, the newspaper reported, citing sources.
The Tesla team is set to focus on states with existing automotive hubs, including Maharashtra, Gujarat, and Tamil Nadu. Musk is believed to be keen on these regions as they have ports, an unnamed source told the newspaper.
The development comes just weeks after the Indian government approved a new policy to lure foreign makers to the EV market. It will allow import duty concessions to companies that set up a manufacturing unit with a minimum investment of $500 million. Prior to the policy, imported cars valued at over $40,000 incurred a 100% customs tax, while those under $40,000 faced a 70% import duty.
Tesla had asked for concessions as a pre-condition for setting up its first manufacturing unit in India. India’s commerce and industry minister, Piyush Goyal, however, has insisted that the tariff cuts are not tailored for Tesla and are meant to attract several potential investors from Europe, the US, and the Far East.
Last year, Goyal visited Tesla’s factory in Fremont, California as part of a broader tour of the US. He asserted that the company was on its way to “double its component imports from India.”
Prime Minister Narendra Modi encouraged Musk to invest in the Indian market during a visit to the US last year. The entrepreneur promised at the time that Tesla would be in India ”as soon as humanly possible,” despite previously complaining about high tariff rates in the country, which he claimed were “the highest in the world.” Tesla has already made significant inroads in neighboring China in the face of stiff competition from homegrown EV manufacturers.
The carmaker has said it is considering building a smaller car in the Indian factory which would sell for around $30,000. It would be exported to south-east Asia, the Gulf, Africa, and Southern and Eastern Europe, the FT reported. Musk has also revealed plans to bring Starlink, a broadband internet service developed by SpaceX, to India.
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