Tesla’s new factory proposal in India revives market negotiations. According to someone familiar with the situation, Tesla Inc (TSLA.O) has proposed building a factory in India to produce electric cars for domestic sale and export.
After India rejected Tesla’s request to reduce the import duty on automobiles last year, which may reach as high as 100%, the country is now considering the suggestion. Tesla intended to test the market with imports first, but India wanted the manufacturer to build vehicles domestically, leading to a negotiation stalemate.
The source, who asked not to be identified because the negotiations were private, said that while Tesla did not bring up lower import duties with Indian officials, it did offer to put up a new facility without naming a location or investment.
Making automobiles in India aligns with Indian Prime Minister Narendra Modi’s “Make in India” strategy to entice corporations, particularly as businesses seek to diversify their supply chains outside China.
Reports from Reuters on Tuesday indicated that senior Tesla executives are currently in India to engage with the government on local sourcing of parts and other issues.
On Wednesday, Tesla reportedly met with government representatives from Modi’s office and other ministries, according to the individual and another source with knowledge of the situation. Reuters’ request for a response from Tesla was met with silence.
Despite CEO Elon Musk’s claims that India has some of the highest import levies in the world, the electric car company has recently expressed renewed interest in selling vehicles there.
Last year, Tesla stopped looking for a showroom to rent after hiring a local crew.
Modi is scheduled to visit the United States in June. Therefore, this meeting takes place just before his trip.
