Tesla must oblige to certain non-negotiables before entering India to sell its vehicles, Indian Minister for Road Transport and Highways Nitin Gadkari said.
For years, Tesla and India have been linked to potential deals surrounding a manufacturing location. Over the last two years, talks have intensified significantly, but the two have not been able to come to terms based on certain wishes from each side.
On Tesla’s side, the company has wanted to test demand through imports, shipping cars from China to India to see if it would be worth building a factory worth billions of dollars for a large market. It would not make sense to spend this money if its cars were not wanted by consumers, which is why Tesla is aiming to build cars in China and ship them to India to see if they would sell.
What makes this increasingly complicated is the fact that import duties in India for cars would nearly double the cost of the vehicle. This would make it hard to test demand because consumers would be less likely to pay twice the price for a car compared to one that was built domestically.
Tesla has tried to get import duties slashed in an effort to gauge demand more accurately, but the Indian government has not budged. Over the past few years, Tesla has tried on numerous occasions to have these taxes reduced or even removed completely, but India’s focus on domestic manufacturing and prioritizing companies based in the country has gotten in the way.
Last week, rumors of potential import duty reductions circulated in India, but Gadkari, who has been the Minister of Road Transport and Highways since May 2014, does not believe the government will budge on import duties, and is maintaining that companies like Tesla must agree to locally manufacture first.
Yahoo! reported that Gadkari is still adamant on this point.
CEO Elon Musk appeared to be interested in a potential investment in India earlier this year when he met with Prime Minister Narendra Modi in New York.
“I am confident Tesla will be in India, and we’ll do so as soon as humanly possible,” Musk said. “Hopefully, we’ll be able to announce something in the not-too-distant future.”
“We don’t want to jump the gun on an announcement,” the CEO also said, “but it’s quite likely that there will be a significant investment and relationship in the future.”
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