Musk Makes It Clear: No Tesla Plants in India Before Govt Gives Market Access

He also said SpaceX is "awaiting government approval" to start rolling out its Starlink satellite internet in India.

Tesla is allowed to import and sell its cars in India, but has to pay a 100 percent tax that is currently imposed on all imported cars worth more than $40,000, roughly Rs 30 lakh.

(Photo: Pixabay)

Electric carmaker Tesla will not set up manufacturing plants in India unless it is allowed to first sell and service its vehicles in the country, CEO Elon Musk has made clear.

"Tesla will not put a manufacturing plant in any location where we are not allowed first to sell and service cars," he tweeted, when asked about his plans for India.

To be clear, Tesla is allowed to import and sell its cars in India, but has to pay a 100 percent tax that is currently imposed on all imported cars worth more than $40,000, roughly Rs 30 lakh.

He also said that his other company, Space Exploration Technologies – commonly known as SpaceX – is "awaiting government approval" to start rolling out its Starlink satellite internet service in India.

The service reportedly had more than 5,000 pre-orders for its devices in India but is struggling to obtain commercial licences, without which the government won’t allow it to operate in the country.

Airtel and Jio, meanwhile, are gearing up to launch their own satellite broadband services. More on that here.

The Impasse

Musk wants the government to cut import duty, so that he can start selling cars and generate sufficient demand to justify building a manufacturing plant in India.

The Centre, however, doesn't want to make an exception for any one automaker. Tesla has to assemble cars in India if it wants to sell here without paying import duties.

"Our request to him is to come to India and manufacture here. We have no problems. The vendors are available, we offer all kinds of technology and because of that, Musk can reduce the cost."

Union Road Transport and Highways Minister Nitin Gadkari

The government's priority currently is to boost local manufacturing of EVs and related components, for which it has rolled out a production-linked-incentive (PLI) scheme worth Rs 26,058 crore.

The Centre has also revised GST (Goods and Services Tax) for local EV manufacturers to 5 percent.

Due to the high import duties, Tesla’s India team has now started working for the larger Asia-Pacific (APAC) market, industry sources told The Economic Times.

Most of the erstwhile team members have traveled to Dubai and are working for Tesla's Middle-East markets, the publication reported, quoting a source familiar with the matter.

(With inputs from The Economic Times)