While American electric car manufacturer Tesla
may have evinced interest in entering the Indian market to sell its cars, it is yet to approach the government
with a fresh offer on building a production facility in the country.
However, cars sold in India through the single-brand retail trading route will have to comply with 30 per cent local sourcing, according to the existing norms, a senior government
official told Business Standard
has reportedly contacted the government
yet again to confirm its intentions on entering the Indian automobile
market through the single-brand retail trading route, as reported by The Times of India
However, a senior government
official confirmed that the talks remained inconclusive. Discussions on setting up a factory have still not progressed beyond an initial intent for production shown by the company back in June, he added.
On the matter, Tesla
Chief Executive Officer Elon Musk
had tweeted back in June that the company was in discussions with the government
for setting up a factory and had requested them for temporary relief on import penalties or restrictions until a local factory is built.
Tesla vehicles to come before the factory is set up?
Sources in the automobile
industry said Tesla
had planned to enter the market by mid-2017 and its plans were already running late.
Taking this into account, the company is keen to start selling its products in India even before a factory is built and wants to get into the market at a time when the hype of electric cars
is slowly gripping the minds of consumers, the government
official, mentioned above, said.
Under such circumstances, it will have to face local sourcing norms, which even mobile manufacturer Apple
had called 'stringent'.
According to the latest consolidated Foreign Direct Investment (FDI) policy of the government, the norms say that in cases where FDI
exceeds 51 per cent, sourcing of 30 per cent of the value of goods purchased will be done from India. This will have to be preferably from 'micro, small and medium enterprises, village and cottage industries, artisans and craftsmen, in all sectors', it says.
such as Tesla
may find it difficult to comply with these as the chances of high-precision components required for the making of a Tesla
car is slim in India.
Under the FDI
norms, the Department of Industrial Policy and Promotion (DIPP) is responsible for approving FDI
proposals in the field of retail, wholesale trading of goods in the country. A senior DIPP official recently said the government
will not move back from the minimum 30 per cent requirement for any company.
In tune with its overarching commitments towards lowering greenhouse emissions and reducing the carbon footprint, the government
has increasingly encouraged the production of electric vehicles
in India. A big push in that direction is expected to unfold over the next few years with the government's target of having only electric vehicles
on Indian roads by 2030.
Even Musk had earlier commented on this target by the government
and his interest to be a part of it.