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Tesla agrees to set up vendor base and start EV assembly in India
Industry News- Jun 09,23
The move follows the Indian government's request for a domestic assembly plant and vendor base. Tesla aims to integrate manufacturing and the supply chain, potentially expediting vendor selection.
According to a report, Tesla, led by Elon Musk, has agreed to establish a vendor base in India and commence the assembly of its electric vehicles within the country. Previously, the Indian government had requested Tesla to set up a domestic assembly plant and subsequently establish a vendor base. Currently, a significant portion of Tesla's production takes place in China.
The report indicates that Tesla prefers to integrate the manufacturing process with the supply chain and may not delay the selection of vendors in India.
In order to commence production, Tesla will need to relocate its vendors to India. These vendors will be required to form joint ventures with Indian companies, as the country does not support 100 per cent Chinese investments following the Galwan clashes in 2020.
Last month, the Indian government requested Tesla to submit a roadmap outlining its plans for India and the estimated time required to establish local supply chains for domestic manufacturing of electric vehicles. The government will review Tesla's proposal before determining the concessions that can be granted to the company. Tesla is expected to provide a detailed proposal for its India operations within the next three to six months.
The government has informed Tesla that if the company establishes a domestic assembly unit for its electric vehicles, it is likely to receive import concessions on imported components. Similar incentives are already in place under the smartphone production-linked incentive (PLI) scheme.
Furthermore, Tesla is no longer emphasizing its previous demand for a reduction in import duties on completely built units as an initial step. Currently, import duty stands at 100% for cars costing $40,000 and above, and 60 per cent for cars below that price range. Tesla had previously requested a reduction to 40 per cent duty.
Source: The Financial Express
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