Road Transport Minister Nitin Gadkari’s message to Elon Musk’s Tesla: ‘If you make it in India’

In a clear message to Elon Musk’s Tesla, Nitin Gadkari, Minister of Road Transport and Highways, has said that the company will get “concessions only if it manufactures locally in India”.

He said, “…but if you make it in China and want to sell in India, there is no concession policy available.”

Tesla is seeking concessions from the Indian government to help it sell its cars at competitive prices in the Indian market.

The Indian government is reportedly considering a policy framework aimed at high-end, technologically advanced automakers like Tesla. The framework is designed to promote domestic manufacturing, including local sourcing, and a reduction in import duties on fully manufactured units during the initial years, reports The Times of India.

The plan includes a substantial cut in import duty on electric vehicles, potentially as low as 15% compared to the current peak of 100%. However, this reduction will be dependent on the commitment by carmakers to start manufacturing operations in India, increase local component sourcing and provide bank guarantees to cover any default on their commitments, it is reported.

The government reportedly wants a firm commitment from companies to set up a supplier ecosystem, with the aim of sourcing around 20% of parts locally within the first two years, which will eventually increase to 40% by the fourth year.

The bank guarantee will be commensurate with the value of import duty reduction provided to the companies for bringing in their vehicles at concessional rates. The measure will serve as a safeguard if companies fail to meet their commitments regarding local manufacturing and investment, the report said.

If this policy is implemented, it will provide substantial benefits to companies like Tesla, BMW and Audi, allowing them to enter the promising Indian market with their electric vehicles while test-marketing their imported models.