Tesla has reportedly proposed the establishment of a factory in India to manufacture electric cars for both domestic consumption and export. According to a reliable source, the carmaker communicated this proposal to government officials on Wednesday.
This move follows India's refusal last year to grant Tesla's request for a reduction in import taxes on cars, which can be as high as 100%. India had insisted that Tesla manufacture vehicles locally, while the company preferred to test the market through imports. These discussions reached an impasse.
While the topic of lower import taxes was not raised during Tesla's recent talks with Indian officials, the company did propose the establishment of a new factory. However, no specific location or investment details were disclosed, as the discussions were of a confidential nature.
Local production of cars aligns with the "Make in India" campaign promoted by Indian Prime Minister Narendra Modi, who aims to attract companies by encouraging domestic manufacturing. This becomes particularly relevant as companies seek to diversify their supply chains beyond China.
According to Reuters, senior Tesla executives are currently in India to meet with the government to discuss matters such as local sourcing of parts. On Wednesday, Tesla representatives met with officials from Prime Minister Modi's office and various ministries, as confirmed by the aforementioned source and another individual familiar with the matter.
Tesla's renewed interest in India comes nearly a year after the company suspended plans to enter the Indian market due to the inability to secure lower import taxes, which Tesla CEO Elon Musk has claimed to be among the highest globally. Previously, Tesla had assembled a local team and initiated a search for showroom space, but these plans were also shelved last year.
This meeting between Tesla and Indian officials takes place ahead of Prime Minister Modi's scheduled visit to the United States in June.