India is reportedly nearing a pact with Tesla Inc. that would enable the American automaker to export its electric vehicles to the country starting next year and establish a manufacturing facility within two years, as per individuals familiar with the Indian government's perspectives.

A potential announcement is anticipated at the Vibrant Gujarat Global Summit in January, with Gujarat, Maharashtra, and Tamil Nadu being evaluated as potential locations due to their well-established ecosystems for electric vehicles and export capabilities.

According to insiders, Tesla is prepared to make an initial investment of approximately $2 billion in any plant, with plans to increase purchases of auto parts from India to potentially $15 billion. Additionally, there are intentions to produce some batteries locally to reduce costs.

Although no final decisions have been made, Tesla CEO Elon Musk had previously expressed plans for a "significant investment" in India, with a planned visit in 2024. The Indian government, including the Ministry of Heavy Industries, the Ministry of Finance, and the Ministry of Commerce and Industry, has not provided official comments on the matter. Tesla has also not responded to requests for comment.

Entering the world's most populous nation would be advantageous for Tesla, aligning with the Indian government's efforts to boost domestic EV manufacturing and promote cleaner transportation. Despite these initiatives, the adoption of electric vehicles in India has been slow, constituting only 1.3% of total passenger vehicle sales last year, mainly due to high upfront costs and a lack of charging infrastructure.

Tesla currently does not directly import cars to India due to steep tariffs. When locally manufactured Teslas become available, some sources suggest they could be priced as low as $20,000. Trade Minister Piyush Goyal, who recently visited Tesla's California plant, stated in September that Tesla plans to almost double its auto parts purchases from India to $1.9 billion this year.

After a year-long deadlock, Tesla and India resumed discussions in May. The potential deal comes after Elon Musk criticised India's import taxes and EV policies, while India advised against selling Chinese-made Tesla cars in the country. India is now contemplating reducing import taxes for international EV manufacturers for a five-year period if they commit to establishing local production facilities.

Source: Economic Times