Indian Government Clarifies Elon Musk's Doubt About Make In India

Recently, Elon Musk had a query from an Indian Twitter user who had asked him about Tesla's plans of launching operations in India. The Tesla CEO responded to the query saying that he was under the impression that a foreign company setting up a manufacturing facility in India needed to source at least 30 per cent of the parts locally and the fact that the supply for the same does not exist in India. With his reply, Musk implied that there might a delay in setting up a Tesla facility in India as opposed to the fact that company might begin its operations by the end of 2017, in the country.

@elonmusk Are there any chances for Tesla to release in India in 2017 or 2018? Waiting for that.

— Avinash Singh (@TheAvinashSingh) May 22, 2017

But the heartening fact here is the immediate response to Musk and the Twitter user from the government of India's 'Make in India' twitter handle, which put out a tweet with a graphic clarifying any doubts that the CEO of Tesla could have had with regards to a plan of setting up shop in India. Also, Tesla is in talks with global suppliers to set up a facility in India.

@TheAvinashSingh Maybe I'm misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn't yet exist in India to support that.

— Elon Musk (@elonmusk) May 22, 2017

The first point that the tweet addressed is that the Foreign Direct Investment (FDI) policy of India does not mandate anywhere that 'manufacturers' need to source 30 per cent of the parts locally. This basically means that if a manufacturer is making a product in India, the parts and the components need not be sourced locally. All the parts and components can be 100 per cent imported. The only condition is that they be assembled or made on Indian soil. So in theory, Tesla can source all parts and components from foreign suppliers and put them together in India and sell its cars without any hassle.

(Tesla)

The second point in the tweet says that a foreign investor, after he makes the product in India, can use any means to sell his product in the country. Be it in wholesale, retail or even E-commerce. So if a Tesla car is made in India, it could be bought by private owners, fleet owners and could even be bought over the internet.

.@elonmusk With respect to news reports on launch plans of Tesla in India being delayed, please note some key clarifications#MakeInIndia pic.twitter.com/9RFICGM9Kk

— Make in India (@makeinindia) May 23, 2017

As per the third point in the tweet, the FDI Policy of India also allows wholesale of imported goods without any mandate of sourcing parts or components in any percentage. So, if the goods/products are made in India, the investor is free to sell them in bulk quantities without having to source any part or components locally.

(Tesla CEO Elon Musk)

And lastly, the fourth point in the tweet says that only for retail trading of goods do the sourcing conditions apply. The sourcing conditions do not apply to foreign investors who are manufacturing in India even if they source all the parts and components from abroad.