According to a source with direct knowledge of the matter, Tesla Inc (TSLA.O) has informed government officials of its plan to establish a factory in India for producing electric cars that will be sold domestically and exported.
Last year, Tesla’s request for a reduction in the import tax on cars was rejected by India, which can go up to 100%. The Indian government had insisted on the carmaker producing vehicles locally, but Tesla was keen to explore the market through imports first. As a result, the talks between the two parties ended in a stalemate.
A source, who preferred to remain anonymous due to the confidentiality of the talks, stated that although Tesla did not broach the subject of reduced import taxes with Indian officials, it did suggest the establishment of a new factory. However, no specific location or investment amount was mentioned during the discussions.
Building vehicles in India supports Indian Prime Minister Narendra Modi’s “Make in India” campaign, which encourages businesses to invest in the country, particularly as companies seek to diversify their supply chains beyond China.
This week, high-level executives from Tesla are meeting with the Indian government to discuss matters related to the local procurement of parts and other relevant issues.
According to one of the sources, Tesla representatives held meetings with officials from Indian Prime Minister Narendra Modi’s office and other government departments on Wednesday. Despite requests for comment from Reuters, Tesla has not responded.
Nearly a year ago, Tesla had to postpone its plans to introduce its cars in India as it was unable to secure reduced import taxes, which its CEO Elon Musk had claimed were among the highest globally. Although the carmaker had hired a local team and initiated the hunt for a showroom space, those plans were also dropped last year.
The meeting occurred a few weeks ahead of Prime Minister Modi’s scheduled visit to the United States in June.
