Tesla to visit PMO officials as it diversifies beyond China
The uneasy relationship between the Indian government and EV maker Tesla might be dealt with an icebreaker soon. A group of senior executives from the Elon Musk-owned company is reportedly heading to New Delhi this week to discuss the strengthening of its supply chain on our shores. The move comes at a time when the firm is trying to diversify its operations beyond China.
Why is the relationship between Tesla and India strained?
India and China are geopolitical adversaries. Hence, the government advised Tesla not to sell its China-made cars in India but to produce locally. Musk first wants to sell cars in India and then manufacture them, while the Centre demands the opposite. The billionaire has also been critical of India's electric vehicle policies and high import taxes. The upcoming meetings might iron out the issues.
What will be the agenda of the meetings?
Tesla is sending business development, supply chain, and production department managers, as well as C-suite executives from its Texas-based supply chain. They will reportedly meet with government officials, including those from Prime Minister Narendra Modi's office. Discussions will be held on cutting import taxes from 110% to 40%, eliminating the 10% social welfare levy on vehicles, and local sourcing of components for Tesla cars.
Tesla registered itself in India in 2021
Notably, Tesla registered its India branch in January 2021. It was called Tesla India Motors and Energy Pvt. Ltd. The Karnataka government urged the EV maker to commence operations there in January 2022. However, the plans fell apart and the brand exited by June 2022.
Rival firms are already selling India-made cars
Tesla might be thinking twice before setting up manufacturing operations in India, but its rivals are betting on the country's potential for growth. Rival firms like Mercedes-Benz, BMW, Audi, and Volkswagen retail locally assembled as well as locally manufactured cars here. They believe the demand for vehicles will further grow in the Indian auto market in the coming years.
Why is Tesla interested in India though?
Diversifying operations has become a necessity for US-based companies. Reason? The US-China trade war is in full swing and is unlikely to end soon. Beijing is subjecting American companies to intense scrutiny and threats of shutdown are looming large. Tesla can draw inspiration from Cupertino-based tech giant Apple. India now serves as its alternative manufacturing base, producing 7% of its global smartphone output.
