Tesla has proposed establishing a factory in India to produce electric vehicles for domestic sale and export, according to a source with direct knowledge of the matter. The proposal was made to government officials on Wednesday.
The proposition is a response to India’s refusal to grant Tesla’s request last year to reduce the import tariff on automobiles, which can reach 100 percent. India wanted the automaker to produce vehicles locally, but Tesla wanted to test the market with imports first, so negotiations broke down.
Tesla did not discuss lower import taxes with Indian officials, but it did propose establishing a new factory, without specifying a location or investment, according to a source who requested anonymity because the discussions were private.
Making cars locally corresponds with Indian Prime Minister Narendra Modi’s proposal to attract businesses with his “Make in India” campaign, particularly as businesses seek to diversify their supply chains beyond China. Reuters reported on Tuesday that senior Tesla executives are in India this week to discuss local procurement of parts and other issues with the government.
Wednesday, Tesla convened with officials from Modi’s office and other ministries, according to the person and another source with knowledge of the situation.
Tesla did not respond to Reuters’ request for comment.
The electric carmaker’s renewed interest in India comes nearly a year after it shelved plans to sell vehicles in the country after failing to secure reduced import taxes, which CEO Elon Musk described as among the world’s highest.
Tesla had hired a local team and begun looking for showroom space, but these efforts were abandoned last year as well.
This meeting occurs weeks before Modi’s June trip to the United States.
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