Two senior Tesla executives — the company’s public policy and business development executive Rohan Patel and its vice president for supply chain, Roshan Thomas — met with officials from India’s investment promotion arm in New Delhi on Thursday, the sources said, asking not to be identified as the talks were private. Invest India CEO Nivruti Rai, a former Intel executive hosted them. Tesla and Invest India declined to comment.
The meeting marks the latest step in negotiations that have been on and off since Tesla’s attempts to enter the Indian market began last year. The company had hoped to test demand for its vehicles in India, the world’s sixth-largest economy, but it was stalled by Indian government efforts to reduce import duties on EVs — which can be as high as 100%. Tesla had previously said it would only enter the country with a commitment to build cars locally. However, it reopened discussions in May after Indian Prime Minister Narendra Modi pushed for the carmaker to make a significant investment.
India is eager to attract foreign investors and promote domestic manufacturing, and it has offered incentives to companies such as Apple to shift production away from China. But the country is a challenging place to do business. Its bureaucracy is notoriously slow and has a history of corruption and mismanagement that can stall projects.
In recent months, however, the government has made several changes to its policies and procedures to improve efficiency and increase transparency. That has included reducing red tape and creating an online portal for businesses to monitor their approvals and applications. It has also opened up its budget and accounts to scrutiny by the public, which has bolstered confidence in the government’s ability to do good business.
The renewed talks are being led by the Commerce and Industry Ministry, which aims to put together “a good deal” that allows Tesla to tap into the market while ensuring a level playing field for local manufacturers. The ministry will look for a way to allow Tesla to set up its factory while maintaining the existing incentive regime.
Tesla has expressed interest in building a factory in India to produce a low-cost electric vehicle (EV) priced at $24,000, around 25% cheaper than the automaker’s current entry model. That would be intended for the Indian market as well as export to other countries in Asia, where demand has been strong. The company could build the factory in Mumbai’s Lower Parel district, one of the city’s leading commercial and technological hubs. If the project is approved, it will be among the newest factories to open in India in recent years. Several other large automakers, including Nissan and Toyota, already operate there. These plants help India meet its growing EV sales needs while reducing pollution and dependence on fossil fuels. The government targets a target of 1.5 million EVs by 2020, representing just under 10% of the nation’s passenger vehicle fleet.