Tesla to source US$1.7 to 1.9 billion worth of auto parts from India in 2023, says Piyush Goyal

US car maker Tesla is planning to source US$1.9 billion worth of auto components as part of its global sourcing plan, said Piyush Goyal, the Union Minister for Commerce & Industry, Government of India.

This is 90% higher than the US $1 billion sourcing that the US EV specialist procured from India.

There is an increased interest by Tesla to leverage India as a base not only for sourcing but use it as a manufacturing base for exports post Prime Minister Narendra Modi’s visit to North America in June.

As per the Reuters news report in August, the Government of India was exploring the possibility of reducing the import duty of EVs following the proposal by the US car maker to locally manufacture in India

On a proposal to reduce import duty on EVs, speaking at the 63rd annual session of ACMA, Goyal said, the government would like to see more investments and a larger production output in India of electric vehicles “as soon as possible” in the near future.

“The idea being if we get large-scale production, we will start enjoying huge economies of scale, fruits of new technologies, innovation, R&D coming into India. The Auto component will not only produce for a larger India demand, but with the same models being sold in the rest of the world you will also start exporting those components - Tesla already sourced 1 billion dollars of components sourcing from all of you sitting here. This year the target is nearly 1.7 or 1.9 billion dollars,” he explained.

The minister said the delta between ICE and electric is further expected to get squeezed as EVs become a “compulsive investment space.” And the government is actively looking at key investors who can participate in this space.

“This is a listening government. There are many opportunities around the world and we are making every effort to attract newer investment. Given the shift in the economic story, going forward, there will be a natural and increasing demand which will create a compulsive case towards sustainability,” he said.

He highlighted that India of today stands “on its own feet” and is being seen as a "trustworthy partner" that will attract fresh investment on the back of a good trade environment, a large market, good managerial talent, and a young demographic with an average age below 30. 

“India will become the unparalleled world leader in electric vehicles,” asserted Goyal.

The policy being considered may allow automakers to import fully-built EVs at a lower rate of 15%, versus 100% at present for cars priced over US$40,000 and 70% for the rest, Reuters had reported in August citing government officials.

Which many considered may impact the local manufacturers. The Minister assured that “The government will come out with a policy that will have stakeholder consultations with all industry bodies,” in order to protect the interest of all stakeholders to ensure impartiality.