Elon Musk, the CEO of Tesla, is set to visit New Delhi, on April 21, where he will meet with Prime Minister Narendra Modi to disclose his investment intentions in the country’s electric vehicle (EV) sector.
The visit includes outlining Musk’s investment plans of up to $20 billion to be executed in various phases, with an initial investment of up to $3 billion. His plans cover investments in the EV sector, component makers, and battery manufacturers. He will also be discussing his intentions of establishing a factory in the country.
India’s emergence as the world’s fastest-growing major economy offers an opportunity for Elon Musk to expand itself. With India’s ambition of becoming a major hub for EV manufacturing and its plans to convert 30% of all private car sales to electric, the country presents a lucrative market for Tesla.
Elon Musk’s decision to invest in India comes at a time when it faces challenges in its biggest markets like the US and China due to market saturation. After reporting a year-over-year decline in its sales in the first quarter of 2024, Tesla plans on restructuring its operations, starting with staff layoffs.
Prime Minister Modi’s emphasis on the manufacturing sector aligns with Tesla’s investment decisions in India. The Bharatiya Janata Party (BJP) has claimed to bring about significant progress in bolstering India’s manufacturing sector over the past decade. Tesla’s investment in India could add to Modi’s vision of turning India into a major global manufacturing hub. With rising tensions between Beijing and Washington, especially after the COVID-19 pandemic, more companies are seeking to diversify their operations beyond China, making India an attractive country for investment.
When Tesla first approached the Indian government in 2017, seeking market entry by requesting a reduction in import duties, which were the highest globally, PM Modi hesitated and insisted on local manufacturing before considering tax incentives.
However, his stance has changed since then, and he now welcomes discussions with Elon Musk as India prepares to beat China in becoming a major manufacturing hub. Accordingly, the government announced a new EV policy in March, slashing import duties to 15% from previous levels of up to as high as 100%, provided that a minimum of $500 billion is invested and a local manufacturing facility is set up.
If Tesla establishes a factory in India, it could create high-tech and high-paying manufacturing jobs, contributing to the country’s economic growth. With Tesla’s entry into the Indian market, advancements in sustainable transportation and job creation hold promise for both the company and the country.
