06:17 GMT +314 October 2019
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    India Clarifies to Tesla CEO Elon Musk on Sourcing Confusion

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    A day after US electric carmaker Tesla’s CEO Elon Musk expressed his difficulty in setting up a plant in India due to investment regulations, the Indian government has said that there are no local sourcing terms for investment as tweeted by Musk.

    New Delhi (Sputnik) — India's Commerce and Industry Ministry clarified through the "Make In India" Twitter handle that manufacturers did not require local sourcing as prescribed for retailers. As per the FDI policy, "a foreign investor is permitted to sell in any manner: wholesale, retail including e-commerce," the ministry noted.

    On May 22, Musk has responded to a query posed by an Indian about the possible entry of Tesla into the Indian market. The Tesla CEO tweeted that his India plans had been dampened by the country's "Make in India" push which requires foreign companies to source at least 30% of their products locally. "The supply doesn't yet exist in India to support that," Musk said on Twitter.

    "Not correct, FDI policy of India does not mandate any such minimum sourcing of component by manufacturers," the ministry responded. It is only for retail trading of goods that sourcing conditions are mandated. Such norms are not applicable to manufacturers as goods are produced in India, it added.

    In February this year, Elon Musk had stated that Tesla planned to enter India with its Model 3 in 2017. The Indian government has been wooing Tesla since 2015 when Indian Prime Minister Narendra Modi visited the Tesla factory in San Jose to discuss the potential for solar-powered batteries.

    Last year in July, India's Minister for Road Transport and Highway Minister Nitin Gadkari asked Elon Musk to make India Tesla's Asia manufacturing hub and offered export facility of their vehicles to South and South East Asian countries.

    The Model 3 is considered Tesla's affordable car and starts at $35,000, the electric car of Indian manufacturer Mahindra and Mahindra is available at around $ 7,705 to $15,410. It was just last week that US car maker General Motors announced bundling of its India business due to price war in the Indian car market.

    The NITI Aayog, the Indian government think-tank chaired by Prime Minister Narendra Modi, unveiled a blueprint this month to promote electric vehicles in India to curb pollution and crude imports. The NITI Aayog asked the government to plan a fiscal incentive program to boost sale of electric car vehicles. NITI Aayog's announcement has caught the eye of Chinese car maker BYD and SAIC. But charging stations may be the biggest obstacle for ramping up sale of electric vehicles.

    Online journal IOPscience estimated the cost of setting up a car charging station ranges from $500 to $25,000, depending on the charging speed. Indian government intends to transfer technology to firms for commercial production of BARC developed lithium-ion batteries for use in automobiles. If Chinese firms push themselves aggressively into the Indian market, it would be very difficult for others, including Tesla, to carve out a major chunk of the electric vehicle market.

     

     

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