Elon Musk’s manufacturing dream

India is revving up efforts to welcome Elon Musk’s Tesla, with government departments racing to greenlight necessary approvals by January 2024. Per a recent media report, in an important meeting led by the prime minister’s Office, top brass discussed the acceleration of Tesla’s investment proposal, aiming to fast-track the electric vehicle (EV) giant’s entry into the Indian market.

What Happened? The meeting, according to an Economic Times report, while broadly focused on EV policy, pinpointed the need to expedite processes for Tesla, as confirmed by a senior official. The commerce and industry, heavy industry, and electronics and IT ministries are actively engaged in talks following Musk’s meeting with Prime Minister Narendra Modi in the U.S.

Tesla’s top executives have laid out their vision to establish car and battery production bases in India, eyeing the country not just as a market but also as a potential hub for its global supply chain. Officials are urging the government to iron out any issues with Tesla to accelerate the announcement of its manufacturing plans.

Work in progress: Previously, Tesla had lobbied for a reduced import duty of 40% on fully built EVs, in contrast to the existing tariffs of 60% for vehicles under $40,000 and 100% beyond that price point. India’s current customs framework doesn’t distinguish between EVs and traditional fuel vehicles, maintaining steep duties to foster domestic production. Tesla has argued for its cars to be classified under a new, favourable EV category, not as luxury imports.

The impasse over duties had stalled Tesla’s initial foray into India, with the government holding firm on its stance for a local manufacturing commitment before any duty relief. Officials also directed Tesla to the production-linked incentive scheme, which offers subsidies to manufacturers, as an alternative to customs duty cuts.