After Centre's demand, Tesla agrees to set up vendor base in India: Report

After relocation to India, Tesla's vendors will be required to form joint ventures with Indian companies as India does not support 100% Chinese investments post-2020 Galwan clashes

Elon Musk-led Tesla has agreed to set up a vendor base in India, apart from starting the assembly of its electric vehicles in the country, The Financial Express (FE) reported on Wednesday. The Centre had earlier asked Tesla to set up a domestic assembly plant here and follow it up by setting up a vendor base. Most of the EV maker's production currently takes place in China.

The report added that the company does not favour decoupling the manufacturing process and the supply chain and thus may not delay selecting the vendors here.

To start production, Tesla will be required to relocate the vendors to India. These vendors will then be required to form joint ventures with Indian companies as India does not support 100 per cent Chinese investments post-2020 Galwan clashes.

Last month, Centre had asked Tesla to submit a road map explaining its India plans and the time it will need to establish local supply chains to begin the domestic manufacturing of its electric vehicles.

The Centre would then study Tesla's blueprint before deciding on the concessions that can be extended to the company. Tesla is likely to get back with its detailed proposal for India in the next three to six months.

The government has already informed the Tesla team that visited the country in the middle of May that if Tesla sets up a domestic assembly unit for its electric vehicles, it is likely to get import concessions on the imported components.

A similar scheme is already operational for the smartphone production-linked incentive (PLI) scheme.

Moreover, Tesla is no longer pressing with its earlier demand for lowering import duty on completely built units first. It is currently 100 per cent for cars costing $40,000 and above. The duty on cars costing below this is at 60 per cent. In the past, Tesla's demand was to slash the duty to 40 per cent.