Tesla won’t set up a manufacturing plant in India until it is first allowed to sell and service cars in the South Asian nation, the carmaker’s chief executive Elon Musk said Friday, more than a year after an Indian state said that the electric carmaker was planning to open a plant in the southern part of the country.
Tesla and the Indian government have been engaging for more than two years to evaluate a pathway for the electric carmaker to enter the world’s second most populous nation.
The Indian government has insisted that Tesla opens a manufacturing plant in the country, so that it can assemble cars locally in the nation, and follows its high import duties if it wishes to sell its vehicles.
The U.S. firm, on the other hand, is seeking lower levies in India so it can test the market by selling cheaper imported electric vehicles before committing to a manufacturing base of its own.
Tesla incorporated a subsidiary in India early last year and registered an office in the city of Bengaluru in Karnataka. The Southern Indian state of Karnataka said shortly afterwards that Tesla “will be opening an electric car manufacturing unit in Karnataka.”
But the two are now at a standstill.
“If Elon Musk is ready to manufacture Tesla in India, then there is no problem,” India’s Road Transport Minister Nitin Gadkari said at an event last month. But manufacturing cars in China and selling them in India is not a “good proposition.”
Several global brands, including Mercedes-Benz, BMW, Toyota and Hyundai have expanded their businesses in India in recent years.
The company had hired Sanjay Bhargava, a former PayPal executive, to lead Starlink’s operations in India. He said that the firm, which had briefly started taking pre-orders in India last year, planned to deploy more than 200,000 active terminals in over 160,000 districts in India by the end of December 2022.