Tesla plans to source parts worth $1.9 billion from India, says Piyush Goyal

Union Minister of Commerce and Industry, Piyush Goyal, announced that Tesla plans to procure components valued at $1.7-$1.9 billion from India, reported news agency Reuters. Goyal also highlighted that Tesla had already sourced components worth $1 billion from India in the previous year.

Goyal’s statement comes amid Tesla’s keen interest in the Indian market, with the company engaging in talks with the government about establishing a manufacturing facility for affordable electric vehicles (EVs).

“Tesla last year already bought $1 billion worth of components from India… this year their target is $1.7-$1.9 billion,” Piyush Goyal said at an auto conference, according to the news agency.

“I am convinced that this (EVs) is the future. It is something we must try to attract,” he added.

The shift in Tesla’s strategy reflects a willingness to manufacture locally in the country, overcoming previous hurdles related to import taxes on EVs. The company’s executives visited India in May, initiating talks about setting up manufacturing facilities for both vehicles and batteries.

It may be noted that high-level meetings were held between Tesla and the commerce minister after Elon Musk met with Prime Minister Narendra Modi in June, during which Musk expressed his intent to make substantial investments in India.

In 2021, Tesla initially sought entry into the Indian market by advocating for a reduction in the 100 per cent import tax imposed on electric vehicles (EVs). However, negotiations between Tesla and Indian authorities faltered when officials indicated that the company needed to commit to local manufacturing before proceeding.

In a notable change of strategy, Tesla has since expressed its eagerness to establish a domestic manufacturing facility. The company aims to produce a new EV with a price tag of approximately Rs 20 lakh, making it approximately 25 per cent more affordable than its current entry-level model.

This move is intended to cater to both the Indian market and facilitate exports. However, the government has made it clear that it is not considering any tax waivers for Tesla.