India nears deal to import Tesla EVs, set up plant

India is nearing a deal with Tesla to import the US electric carmaker’s vehicles from next year, Bloomberg reported, citing unidentified officials aware of the government’s plans.

The electric vehicle (EV) maker is also likely to set up a factory in India over the next two years, with an announcement on the deal likely to be made at the Vibrant Gujarat summit in January, the report said.

Gujarat, Tamil Nadu and Maharashtra are in contention as these already have robust ecosystems in place, the report added.

In June, Tesla chief executive officer Elon Musk had said the the automaker plans to make a “significant investment” in India and that he intends to visit in 2024.

Trade minister Piyush Goyal, who toured Tesla’s Fremont, California plant, this month had said in September that the EV maker aims to increase its auto part purchases from India to $1.9 billion this year, a significant rise from last year’s $1 billion.

After a year-long pause in negotiations, Tesla and the Indian government renewed talks to bring the EVs to India, the third largest automobile market, in May.

Musk has voiced concerns about India’s steep import taxes and EV policies, while India has expressed reservations about selling Tesla cars in the country that are manufactured in China.

In a move to foster growth, India is reportedly considering reducing import taxes for foreign EV manufacturers for a limited period, contingent on their commitment to set up local production units.

Gaining a foothold in the world’s most populous country, with its burgeoning middle-class interest in EVs, could be a boost for Tesla, which already operates factories in China, Germany and the US.

The government is actively promoting the swift transition to eco-friendly transportation and encouraging domestic production of EVs. Currently, Tesla refrains from directly importing cars to India due to substantial tariffs. However, when its first India-manufactured vehicles hit the market, they might be priced as low as $20,000, according to some sources, the Bloomberg report added.