Tesla to choose India over China? Offers to set up EV factory, say reports

World's largest electric vehicle manufacturer Tesla has renewed its efforts to enter the Indian EV market after its team of executives met government officials on Wednesday, May 17. According to reports, Tesla has offered to set up its electric vehicle manufacturing facility in the country in a fresh approach after previous talks ended in a deadlock over high taxes on imported cars. The latest development takes place almost a year after Tesla CEO Elon Musk had practically called off his India plans. The meeting assumes significance ahead of PM Narendra Modi's visit to the United States next month.

According to news agency PTI, Tesla's proposed India GigaFactory will be aimed to manufacture electric cars locally which will also be used for exports in Asian and other markets. However, there have been no talks on the location of the EV facility or the amount of investment Tesla is willing to put in.

Tesla's warming up to India again is seen as the EV maker's attempts to diversify beyond China, its largest market outside the US. Amid rising tension between the US and China, several carmakers, including Tesla, may be pushed to the point of finding new destination for EV business in future. Besides components, China is also key to global EV business for its battery manufacturing. India could be the alternative market where the government is eager to promote local manufacturing.

Earlier, the Centre had advised Tesla to set up a local manufacturing plant if it wanted to sell EVs in India. Union Minister Nitin Gadkari had said Tesla will be welcome to India if it manufactures EVs locally and not import them from China. Elon Musk had refused to take the offer saying, "Tesla will not put a manufacturing plant in any location where we are not allowed first to sell and service cars."

After hectic lobbying until early last year, Tesla's fresh move does not include talks of reducing import duties. According to sources quoted by news agency Reuters, Tesla executives who met officials from the PMO did not raise the matter in the meeting. India imposes 100% import duty on fully imported cars with CIF (Cost, Insurance and Freight) value of more than $40,000 and 70 per cent on those costing less than the amount.

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