Will Tesla Enter Indian Market Despite Challenges?


Elon Musk, the founder of Tesla, has been eying the Indian market for the last three years and still, Tesla cars have not entered the Indian market. Recently, Tesla has shown interest in launching its operations while complaining at the same time that the local manufacturing and import duties of the country. The Centre has previously stated that Tesla is welcome to set up their base in India and further, sell their Tesla cars both locally and in the international market. While commenting on it, Tesla asked the government to slash the import duties first to ensure to make the country more business-friendly. While reacting on the same, the Indian government said that it will consider reducing the import duty once the company sets up the manufacturing factory in India. 

Why Has Tesla Still Not Entered The Indian Market?
India has proved to be a business-friendly country. Not only is it encouraging international companies to set their base in India but it is also promoting the India start-up ecosystem by encouraging companies like GATI, Byju’s and Delhivery to flourish. However, the Indian government till now has failed to provide the same environment to Tesla. The company wanted to enter the Indian market in 2019 but the high import tax on electric vehicles is stopping it from doing it. In India, the import tax on electric vehicles that cost $40,000 or less is 60% while it is 100% for electric vehicles that cost more than $40,000. 

The price of a Tesla car is $44,690 which is approximately INR 34 lakh, with an import tax of 100%, the selling price of the car will eventually be approximately 60 lakh which is considered high by Elon Musk. Last year in July, in a tweet, Elon Musk stated that the import duty of India is one of the highest in the world. Tesla believes that with such high import duty doing business in India will not make sense as the car will become unaffordable for the Indian citizens. 

How Did Different State Governments React?
After knowing that Tesla is interested in planting its manufacturing plant in India, several state governments offered a space in their state for the manufacturing plant. K.T. Rama Rao, the Industry and Commerce Minister of Telangana while inviting Tesla said that he will be happy to work with Tesla for setting their shop in Telangana and further stated that the state is known for its sustainability initiatives and is also a business destination in India. 

Joining the race, Navjot Singh Sidhu tweeted that for Tesla, Ludhiana is willing to become a hub for the Electric Vehicles and Battery industries and further added that it will support time-bound single-window clearance for investment. The tweet further reflected that Punjab is looking forward to creating green jobs and focusing on sustainable development and environment preservation. 

Jayant Patil of the Maharashtra government also tweeted back to Elon Musk that the government of Maharashtra is ready to provide him with the help required to establish themselves in Maharashtra, a progressive state of India. Also, M B Patil, of the Karnataka government while welcoming Tesla said that Karnataka has always been ready for the development of industries and the state is not only an IT capital but also, knowledge capital.

Will Tesla Enter The Indian Market Any Time Soon?
When Narendra Modi, Prime Minister of India visited the Tesla Fremont Factory in Northern California in 2015, the dialogue between Tesla and India was initiated. However, Tesla was not willing to step into the Indian market with such high import tax which will make the car super expensive in the country. With the current import rate, Tesla cars of India will be the most expensive ones. 

The Indian government on the other hand is only willing to help Tesla if the company can commit to manufacturing locally. Further, it was stated that Elon Musk to date has not provided a proper plan that shows that it wants to invest in the country. Currently, there is a deadlock between Tesla and the Indian government. The demands of Tesla have been reviewed by the Indian government, however, it was stated by a senior Indian government official that the import duty won’t be cut any time soon. Therefore, it can be said that the Indian market is not ready to invite Tesla yet.

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