Tesla won't get favour from Centre upon India launch, states may offer: Report

World's largest electric vehicle manufacturer Tesla will not get any special favour from the Centre when it plans to enter the Indian markets. According to a report from news agency PTI, sources have confirmed that the government is not planning any tailor-made incentives to the EV maker owned by Elon Musk as of now. However, the sources say that states are free to allow special concessions to Tesla to set up facility in India if the governments choose to. Tesla recently renewed its interest in India as its executives met officials in Delhi last month. The meeting triggered fresh speculation of Tesla launching its electric cars in the country after it put such plan on hold post earlier talks ending in a deadlock.

According to a report by PTI, Tesla is interested to build a complete supply chain in India. The move is seen as Tesla's efforts to reduce dependency on China, its biggest market outside United States. Reports suggest Tesla is keen to set up an EV manufacturing facility in India as well, which was later confirmed by Elon Musk. However, Tesla has not approached the Centre with its demand to lower import taxes this time after the government had denied such favour unless the EV maker commits to make electric vehicles in India. The source quoted by PTI said, “The government is not looking at any tailored incentives as of now. States are a different matter. States might compete with each other and someone might give them (concessions)."

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."

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. The move is significant, especially ahead of PM Narendra Modi's upcoming visit to the United States this month. 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.