comscore Indian states are eyeing investment from Tesla, but will Elon Musk listen?

Indian states invite Elon Musk to set up Tesla factory, but is it feasible?

A lot of states in India are vying to be the EV capital of the nation. In order to accelerate change in this direction, there are multiple policies and subsidies in place.

Tesla Model 3

Tesla in India – Tesla has suddenly become the most eligible bachelorette/bachelor in town. Indian states are rolling out one red carpet after the other for the American mega EV company. But is it that easy to bypass the centre? Also Read - Tesla to have self-driving cars on road without human drivers by May 2023, says Elon Musk

Earlier this week, Tesla CEO Elon Musk re-ignited the debate of its debut in the country. Elon put out a tweet saying Tesla is “facing challenges” with the Indian govt. Contrary to maintaining a united front, many state leaders, ministers bypassed the central govt to informally invite Tesla to set up facilities in their state. Telangana, Karnataka, Punjab, Tamil Nadu, Maharashtra and West Bengal have already sent out invites to Elon Musk to set up Tesla facilities in their states. Also Read - Tesla is on my mind 24/7, says Elon Musk amid concerns over Twitter distraction

States eyeing Tesla’s billions in investment

Soon After Musk’s January 12 tweet, Telangana’s industry and commerce minister KT Rama Rao sent out an invite on Twitter. The minister offered help to Musk in sorting out the aforementioned “challenges”. Also Read - Hackers can steal your Tesla, smartphones using a simple Bluetooth hack

Rao’s feelings were echoed by a prominent actor in the southern state. Vijay Deverakonda shared a tweet endorsing the state’s government appeal to the billionaire.

Ghulam Rabbani, a minister in the West Bengal govt also invited Tesla with a strong “Bengal means Business” tweet. Rabbani endorsed the state govt and current CM Mamata Banerjee.

Maharashtra is turning out to be one of the biggest states that are siding with Elon Musk’s demand for lower custom duty on imported electric cars. Aaditya Thackeray, the Cabinet Minister of Tourism and Environment for the Government of Maharashtra wrote a letter to FM Nirmala Sitharaman to look into the company’s demands.

Another Maharashtra minister, Jayant Patil sent an open invitation to Elon Musk. The minister invited Tesla to set up a manufacturing plant in the state and also promised “all the necessary help”.

Punjab’s Navjot Singh Sidhu also joined the bandwagon by pitching Ludhiana as the “future hub for electric vehicles and the battery industry”. He promoted a time-bound single window clearance which is aimed at helping green companies.

Tamil Nadu minister Thangam Thennarasu shared the state’s credentials with Elon Musk. Thennarasu claimed that Tamil Nadu accounts for 34% share in total planned investments for electric vehicles. He also said that the state is one of the top nine renewable energy markets in the world.

The latest to join this list of states is Karnataka. Karnataka Minister for Large and Medium-scale Industries Murugesh R Nirani tweeted that the state has over 400 R&D centres, 45+ EV startups. He claims that the state has an EV cluster near Bengaluru which has become the EV hub of the country. Additionally, Tesla has already registered its name in Bengaluru, making a strong case for the state.

Despite numerous offers from these states, does Tesla really have an option?

A lot of states in India are vying to be the EV capital of the nation. In order to accelerate change in this direction, there are multiple policies and subsidies in place. Telangana released its EV policy in 2020 for the next 10 years. According to the policy, the state aims to attract investments worth $4.0 billion and create employment for 1,20,000 people by the year 2030. It plans to achieve all this through EVs in shared mobility and charging infrastructure development as well as manufacturing activities.

The state of West Bengal released its EV policy in June 2021. The region aims to be among the top three states in India in terms of EV penetration by the end of 2022. It also plans to become the best Indian state in terms of EV adoption by the year 2030. During this period, the state govt has plans to run 10 lakh EVs on the roads and provide 1 lakh public or semi-public charging stations.

The stalemate between the Centre and Tesla

Apart from these dedicated policies, the central govt’s Fame-II scheme, as well as state-level subsidies for buyers, do make EVs an attractive proposition in India, for both buyers and investors. However, the stalemate situation between the central govt and Tesla still remains, well, a stalemate.

No state can bypass the high import duties. If a car is priced under $40,000, the vehicle will attract a duty of 40 percent. However, if the vehicle is priced over $40,000 the custom duty goes straight to a 100 percent. Doubling the cost of the vehicle is not something Tesla would want.

On the other hand, Elon Musk’s company is not confident enough to open a manufacturing facility in India. Musk first wants to gauge the Indian buyer’s interest in his EVs before investing in a manufacturing plant or even an assembly line.

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  • Published Date: January 21, 2022 12:42 PM IST

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