- Elon Musk plans to visit India to meet with Prime Minister Narendra Modi and announce Tesla’s investment plan for a factory.
- Tesla’s attempts to enter the Indian market have been hindered by high import tariffs, despite the government’s desire for a local plant.
- A compromise on import tariffs was recently reached, potentially opening doors for Tesla and other electric vehicle manufacturers in India.
Elon Musk plans to visit India from April 22 to 28 to meet with Indian Prime Minister Narendra Modi. During this visit, he will announce Tesla’s investment plan to build a factory in India.
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Tesla prefers to first establish a presence in India by importing vehicles
Tesla has been attempting to enter the Indian automobile market for years. The Indian government hopes Tesla will establish a plant in the country, but Tesla prefers to first establish a presence in India by importing vehicles and then invest in building a factory. However, due to India’s trade protection policies, Tesla has been unable to bypass high import tariffs, hindering its success.
There are high tariffs on imported cars in India
India currently imposes high tariffs on imported cars, with rates of 60% for those priced below $40,000 and 100% for those above $40,000. Tesla proposed lowering this to 40%, but agreement had not been reached. Last month, the Indian government reached a compromise on import tariffs, opening doors for Tesla and other electric vehicle manufacturers in the Indian market.
Although India claims the reduction in import tariffs is not solely for Tesla and that Tesla will not receive special treatment, reports suggest the move aims to attract Tesla’s investment, while Tesla hopes India will lower import tariffs for electric vehicles.
According to the Financial Times, Tesla plans to send a team to India this month to explore potential locations for a proposed $2-3 billion electric vehicle factory. To fully leverage the import tariff benefits from India’s new policy (allowing import of up to 40,000 electric vehicles), Tesla needs to invest at least ₹4.15 billion (approximately $50 million) in India within 3 years, achieve a 25% localisation rate by the 3rd year, and then reach 50% by the 5th year.
