In a latest development, Elon Musk’s Tesla has in-principle agreed to the suggestion by the Centre that apart from assembling its electric vehicles in the country, it also set up a vendor base here.
Tesla Assembling Electric Vehicle In India
The company can first start with domestic assembly of cars and later follow it up by setting up a vendor base, the government said.
It seems that Tesla may not delay the setting up of the domestic vendor base much as it does not believe in decoupling manufacturing and supply chain.
Presently, more than half of Tesla’s global production happens in China (Shanghai) as it has developed a large vendor base there.
Besides this, the company has also built a megapack battery factory there recently.
If the company goes ahead with the plan of starting a manufacturing base in India then it would be relocating these vendors to India.
So these vendors would then need to form joint ventures with Indian firms as post-2020 border clashes as we already witnessed that India discourages 100% Chinese investments.
A Hard Bargain For India
Tesla would drive a hard bargain with India as China is also currently courting Musk on retaining its investments in the country, according to analysts.
Musk had recently visited China and met the top leaders there.
Earlier, media reported that the government has asked Tesla to submit a roadmap on the time-frame needed by it to set up an indigenous supply chain.
Which company is expected to submit the same in the next three to six months.
Till the time the company sets up its supply chain here, the government is willing to offer import concessions on the components required for the same, said the officials.
So far, this kind of scheme works for the smartphone production-linked incentive scheme under the phased manufacturing programme (PMP).
The officials said, “the government is willing to give time for setting up a domestic vendor base but Tesla will have to indicate a period by which the duty concessions on components granted to it will come to an end.”
It appears the center has done the same for Apple under the smartphone PLI scheme.
Apple as well as Samsung have duty protection on components required for domestic assembly of phones, under the PMP.
However, they have to source them locally within the timelines set for them.
In a recent update, several of Apple’s Chinese vendors agreed to set up joint ventures with Indian firms for their supply chains in the country.
If Tesla agrees to set up a manufacturing plant in the country, along with a timeline for meeting indigenisation levels then the government may come out with a modified PLI scheme for electric vehicles and advanced chemistry cell battery to invite fresh investments by companies which did not participate earlier.
