India Wants Tesla To Spend $500 Million On Local Parts Before Considering Tax Cut Request

India wants Tesla to spend $500 million on locally made auto parts before the government considers Tesla’s tax cut request, according to a Bloomberg report. For years, Tesla supporters in India have been wanting Tesla to come to their country, and it’s been an incredibly long road. This latest news is just another chunk of a challenge that Tesla is facing to make its Indian fans’ requests come true.

According to the report, an anonymous source aware of the Indian government’s stance on Tesla said that Tesla would have to agree to ramp up domestic auto part purchases by around 10–15% per year until an appropriate level is reached. In addition, Tesla needs to approach the Indian government with an auto parts sourcing plan that will support its vehicle sales expectations for the country. Reportedly, Tesla is advised to export India-made components to China. So far, India’s transport ministry representatives have not commented on this — and neither have Tesla representatives.

In 2019, Tamil Nadu’s Chief Minister toured Tesla’s Fremont Factory and learned about Tesla’s manufacturing, its vehicles, and the Tesla Supercharging network. In 2021, India’s minister for road transport and highways confirmed that Tesla would start offering its products to customers in India and would start by importing them. However, there’s been a bit of a stalemate over taxes since the news of 2019 and 2021.

Elon Musk tweeted that a Tesla factory in India would be likely if it could start with the sales of imported vehicles, but that India’s rules currently prohibit Tesla from testing the Indian market due to the high duties that make Tesla vehicles unaffordable. Unfortunately, the government isn’t interested in cutting those taxes to make them affordable for Tesla’s customers in India. As of 2021, EVs made up less than 1% of car sales in India. In China, the battery electric vehicle share was 12% at the time of this August 2021 article.

However, Tesla doesn’t seem to be giving up and has made some progress in India. Teslarati noted that in 2021 Tesla received homologation certificates for seven of its car models and Supercharger stalls have been shipped to India. Several of India’s politicians are also in support of Tesla.

It makes sense that India wants Tesla to spend money on local parts. This would boost India’s local economy and help businesses that are in the automotive market. If Tesla was to invest $500 million into India’s domestic auto parts market, this would also send a signal to everyone — whether they are a business or a customer — that Tesla, a leading cleantech company, sees potential in India and is investing in its clean energy future.


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