Government Of India Reveals Tesla Hasn't Applied For PLI Scheme

The government of India has fired back at combative electric car maker Tesla which has been lobbying for massive import duty cuts which would enable it to sell its made in china cars in India. But now the government has fired back and revealed that Tesla only seeks import duty relief but has made no commitment towards local manufacturing and has not even applied for the Rs 44,000 crore PLI scheme. This scheme enables local eco-friendly manufacturing for automobiles, auto components and advanced chemistry cells in India.

"They have not applied. Tesla can avail of benefits under the PLI scheme for the auto sector, for making advanced chemistry cells but the company wants concessional duties without showing any commitments to produce here," said a senior government official to the Economic Times.

Recently, actress Pooja Batra imported a Tesla Model 3
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The incentives outlined by the government offer up to 18 per cent concessions to address cost disabilities and encourage auto makers to have deeper localisation of their supply chain in India. The aim of the government is that the advanced automotive technology be developed and manufactured in India. It has revealed that it has already received investment proposals for up to Rs 45,016 crore from 20 applicants under the PLI scheme. These applicants include Hyundai, Suzuki motor Gujarat, Ashoke Leland, Mahindra and Mahindra, Hero MotorCorp, Bajaj Auto and Ola Electric.

American electric carmaker Fisker Automotive has also revealed that it will be bringing the Fisker Ocean electric crossover to India and later on will even manufacture the Fisker Pear in India in partnership with Foxconn. There are also reports that Ford is planning on leveraging its plant in India for EV manufacturing for export purposes. The government will release the official approved list of candidates next month.

Tesla's chief executive, Elon Musk, who is also the world's richest individual revealed last year that India's import duties were the highest for any large country. He proposed dramatic reductions. Tesla has been of the view that it needs to create a business case for local manufacturing which will only happen with the sales of its cars that are manufactured outside India.

Musk recently tweeted that issues had to be resolved with the GOI for Tesla launch in India

Tesla currently has four active Gigafactories - two in the US, one in Berlin for Europe and one in Shanghai for the Chinese and Asian market. Likely, Tesla is looking to serve India from its Chinese gigafactory, but the India government wants to see a commitment towards local manufacturing.

In fact, when Musk in January revealed on Twitter that issues had to be resolved with the Indian government, he was courted by many states, but all insinuated local manufacturing benefits in their overtures.

This stalemate comes after in January 2021, Tesla incorporated its Indian entity Tesla Motors India and Energy in Bangalore with investment pipped via its Dutch arm. Tesla's Model 3 is said to have reportedly also have failed road tests in India where there is chatter about a major suspension overhaul for the car in India. Elon Musk also revealed that it has put plans for the development of $25,000 car on the back burner and is currently focusing on enhancing its production in view of the global semiconductor shortage.

Tesla's goals are towards enhancing profitability and elevating production, while India wants local manufacturing, a capital intensive task that the world's most valuable automaker is not willing to do so.