Tesla May Be Preparing to Set Up Vendor Base in India

Tesla reportedly has found common ground with the Indian government. According to a report, the manufacturer is considering assembling vehicles in the country and establishing a local vendor base.

Tesla and India find common ground for further development

Recently, high-ranking Tesla executives visited India, where they met with local top officials. Various sources reported that the parties are negotiating in order to find common ground that will ensure Tesla’s entry into the country’s market. Now Financial Express (via Benzinga) has reported that the company has reached an agreement with the government. Tesla is reportedly considering assembling its electric vehicles in India, and intends to build a local supplier base on government-suggested terms.

Tesla will create a supply chain in India

American manufacturer usually creates a supplier base in the countries where it settles. This provides significant savings in production and brings great benefits to the country. Tesla values the integration of manufacturing and supply chains.

The report notes that the move to start manufacturing in India will also involve moving Tesla’s existing suppliers to the country. Due to tensions between India and China, the Indian government does not approve fully Chinese investment. The government has asked Tesla for a roadmap with a timeline for setting up a local supply chain. It reportedly expects to receive a response within three to six months.

India promises incentives for imports of components

In return for Tesla’s move, government officials told the arriving team they were willing to offer incentives to import essential components until the American manufacturer established its supply chain directly in India. In addition, the government plans to offer Tesla protection from duties on components needed to assemble cars domestically.

If Tesla agrees to set up an assembly plant and a local supply chain, the government could introduce a revised incentive scheme for electric vehicles and batteries with advanced chemistries to attract new investment.