Tesla has proposed setting up a factory in India to build electric vehicles for domestic sales and exports, the automaker told government officials on Wednesday, according to sources with direct knowledge of the matter.
The proposal comes after India refused to agree to Tesla’s request last year to reduce import taxes on cars, which could be up to 100%. India wants the automaker to build cars locally, but Tesla wants to test the market through imports first, and talks have stalled.
While Tesla has not discussed lowering import duties with Indian officials, it has proposed building a new factory without specifying a location or investment, sources said. The source declined to be named because the negotiations are private.
Making cars locally is in line with Prime Minister Narendra Modi’s push to attract companies through his “Make in India” campaign, especially as companies look to diversify their supply chains beyond China.
Senior Tesla executives will travel to India this week to meet with the government to discuss local sourcing of parts and other issues, Reuters reported on Tuesday.
Tesla met with officials from Modi’s office and other ministries on Wednesday, the person and another person familiar with the matter said.
Tesla did not respond to Reuters’ request for comment.
The electric carmaker’s renewed interest in India comes after it shelved plans to sell cars there after failing to secure lower import taxes, which CEO Elon Musk said were among the highest in the world.
Tesla hired a local team and began looking for showroom space, but that too was abandoned last year.
The meeting comes weeks before Modi’s visit to the United States in June.
© Thomson Reuters 2023
