In a groundbreaking development, electric vehicle manufacturer Tesla Inc has outlined its intentions to acquire components valued at an estimated $1.7-$1.9 billion from India. The announcement was made by India’s Union Minister of Commerce and Industry, Piyush Goyal, during an address at the 63rd Annual Session of the Automobile Component Manufacturers Association of India.
Minister Goyal articulated, “Tesla, just last year, procured components worth an impressive $1 billion from the distinguished companies represented in this gathering. For the ongoing year, their target is poised to reach a remarkable range of $1.7-$1.9 billion.”
A report from Reuters last month had previously hinted at Tesla’s discussions with senior government officials regarding the establishment of an Indian factory. This proposed facility would be dedicated to producing a low-cost electric vehicle (EV), priced at an estimated $24,000. Notably, this cost would make it approximately 25% more affordable than Tesla’s current entry-level model, catering to both the Indian domestic market and international export.
Minister Goyal also addressed the issue of potential retaliatory measures against countries that restrict access to Indian steel companies while permitting the export of steel to India. He specifically referred to companies importing automotive steel from their parent nations.
It is noteworthy that the automotive industry in India still relies on imports for 20% of its steel requirements, with varying degrees of dependency across different companies. This indicates that some companies choose to import steel even when domestic sources are competitively priced and of superior quality.
Furthermore, Minister Goyal dismissed the argument made by certain global auto firms that their investments in India were a result of market size. He emphasized that attracting investments to India should not necessitate a continued reliance on imports for goods that are readily available locally at competitive prices and of impeccable quality.
The Minister also scrutinized the practice of some companies that channel investments from one region while importing components and inputs from third-party countries that may not be particularly favorably disposed towards India. He indicated that India might need to examine products imported at zero duty under free trade agreements more rigorously to ensure fair competition between Indian suppliers and the countries from which these products originate. He added that non-tariff barriers established by certain countries, whether formally or informally, to prevent the import of goods from other nations, were areas of concern.
Minister Goyal underscored that his ministry is actively formulating quality control standards for various products and encouraged the industry to focus on enhancing research and development (R&D) capabilities. He emphasized the importance of addressing workforce skilling, upskilling, and retraining as well.
