Government of India assuages Elon Musk’s fears about sourcing

What started off as a simple tweet by Tesla Motors’ chief Elon Musk to announce a new algorithm of Tesla's autonomous driving feature ended up helping the serial entrepreneur get some information that will help his company's India business strategy.

Responding to the first tweet on Sunday, a Musk 'follower' enquired about Tesla’s plan to foray into the Indian electric car market. “Maybe I'm misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn't yet exist in India to support that,” was Musk’s reply.

This came as a surprise for many industry watchers, given the Musk’s reply in February 2017 to a similar question – “Hoping for Summer this year.”

The government of India’s ‘Make In India’ Twitter handle was quick to clarify and make a pitch inviting the company to set up its manufacturing base in the country – “No sourcing conditions are mandated when it comes to manufacturers as goods are manufactured in India.” It also pointed out that the country’s FDI policy doesn’t mandate any minimum sourcing norms for manufacturers and the company is free to sell in any manner: wholesale, retail including e-commerce.

In July 2016, Union Minister for Road Transport, Highways & Shipping Nitin Gadkari, during his visit to United States, had visited the Tesla plant, offering to promote joint ventures between the global leader in electric car manufacturing and Indian automobile OEMs with a view to introducing pollution-free road transport in India, especially commercial and public vehicles.

At the time, Tesla senior executives had acknowledged the fact that a new manufacturing hub has to be set up outside the US to cater to global markets and appreciated the Indian offer of cooperation, which would be considered at an appropriate time in the future. They said India will definitely be a market for their next-generation, low-cost Model 3 which has seen record bookings of over 400,000 units, including some from India.

India’s new focus on EVs
Niti Aayog, the government’s policy think-thank, believes India has a ‘leapfrog’ opportunity to create a shared, electric, and connected mobility future, one which promises to deliver clean, affordable, efficient, and reliable transportation options.  

With global demand for EVs soaring and Tesla’s disruptive products which have seen huge demand in the US and Europe, the American EV technology major would be just what the doctor ordered for the Indian market to give further charge to the EV cause, even if Tesla cars are hugely priced.