"Tesla Considers $2 Billion Investment in Indian Manufacturing, Subject to Conditions"

Tesla is reportedly considering a substantial investment of up to $2 billion to establish its manufacturing facility in India, contingent upon securing a 15 per cent concessional duty on imported vehicles for the first two years, as reported by The Economic Times (ET) recently.

The US-based electric carmaker has submitted a proposal to the Indian government outlining the investment plan. The investment amount may vary based on the extent of the concessional duty. If Tesla receives a concessional duty for 12,000 vehicles, the investment may amount to $500 million. However, the investment could potentially escalate to $2 billion if the concession extends to cover 30,000 vehicles.

Conversely, the Indian government is considering a concessional tariff structure for Tesla, proposing a 10,000-unit concession in the first year and a 20 per cent concession in the second. Currently, India imposes a 100 per cent import duty on cars with a cost, insurance, and freight value exceeding $40,000, and a 70 per cent duty for vehicles below that threshold.

According to the ET report, Tesla is likely to commit to 20 per cent localization in its Made-in-India cars during the initial two years, with the potential to increase to 40 per cent within four years.

Tesla's entry into the Indian market may feature three models: Model 3, Model Y, and a new hatchback. If the concessional duty is granted, Model 3 and Model Y are expected to be priced at Rs 38 lakh and Rs 43 lakh, respectively, while the hatchback may carry a price tag of Rs 20.75 lakh.

Bloomberg reported on November 21 that Tesla's official announcement of its investment in India is anticipated at the Vibrant Gujarat Global Summit in January. The states of Gujarat, Maharashtra, and Tamil Nadu are under consideration for the manufacturing facility due to their well-established ecosystems for electric vehicles and exports.

Commerce Minister Piyush Goyal, who visited Tesla's plant in Fremont, California, earlier in the month, mentioned in September that Tesla plans to nearly double its purchases of auto parts from India to $1.9 billion this year. In 2022, Tesla sourced parts worth $1 billion from India.

Tesla's reengagement with India, the world's third-largest automobile market, comes after a year-long impasse. Elon Musk has criticized India's high import taxes and electric vehicle (EV) policies, while India has advised Tesla not to sell cars in the country that have been manufactured in China, its political rival. India is now considering reducing import taxes for international EV manufacturers over five years if they commit to establishing local factories.

BS