Tesla Expresses Interest in Indian Vendor Base, Accelerating Plans for Domestic Manufacturing: Report

Tesla has reportedly agreed in principle to the Indian government’s proposal to establish a vendor base in the country. While the government has suggested that Tesla initially focus on domestic vehicle production before setting up a vendor base, the report suggests the company may expedite the process due to its belief in an integrated manufacturing and supply chain.

According to the Financial Express, Tesla has been requested by the Indian government to submit a roadmap outlining the timeline required to establish a local supply chain. That roadmap is expected to be submitted by Tesla within the next six months. Until the local supply chain is set up, the government has offered import concessions on the components needed for the supply chain.

Following Tesla’s agreement to set up a manufacturing plant and a timeline for achieving indigenisation levels, the government may introduce a modified Production Linked Incentive (PLI) scheme for electric vehicles and advance chemistry cell batteries to attract fresh investments from companies that did not participate previously, the publication reports.

Modifications to the incentives and the option for participating companies to migrate to the new scheme are also being contemplated. This approach has been previously employed in the telecom and IT hardware PLI schemes.

Interestingly, Tesla has shifted its focus from its earlier demand for a reduction in import duties on vehicles built outside of India, which currently stands at 100% for cars priced at $40,000 and above. The company previously pushed for a reduction to 40% but has since moved away from this stance at coming to an impasse last year.

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