Tesla coming to India

Can Karnataka become home to the first Tesla Plant Invitation to Elon Musk for the deal

There are two types of personalities in the world -those who live in present and those who prepare for the future ahead of time. And then there is a third unique kind- these are the people who work to make future inventions a reality in the present.

Don’t worry as these aren’t the elements of mind-bending trivia. This is a reference to Elon Musk and we all know which category he falls into. For instance, take the example of his vision to colonize Mars in 2024, his aim to bring tesla electronic cars to common people and his role as an influencer. Every time he is in the news, tech-savvy minds start to wonder what new he is about to bring.

And he has done it yet again. The news in the country is that Tesla might setup its first manufacturing plant in Karnataka. Let us dwell deeper into the insights and know what the fuzz is all about.

How it all began

The tale unfolded when the surcharge levied by the Indian government on electronic cars came into the eyes of Tesla authorities. The company had requested the Union Government of India to remove the social welfare charge on cars, which was 10%. This was an attempt to cut import duties on the cars as it did put a dent in the sales and revenue model of the tech-giant company. Elon Musk also indicated his will through tweets addressing how the Indian government should change the taxation policies so that Tesla can be uninterruptedly imported to the country. This also relates to the tweet from the chief of the company which indicated his challenges for setting up a manufacturing plant for Tesla cars. And since then, a vision was formed- tesla would one day be manufactured in India. And the vision might become reality soon. Let us know how.

The Government reply-positive or negative?

Since the tweet was published, many politicians and higher government officials showed keen interest in the news. But Telangana Industry and commerce Minister K.T. Rama Rao was the first one to respond. In his tweet cum invitation, he wrote “Will be happy to partner with Tesla in working through the challenges to set shop in India/Telangana.” Now, this might not seem interesting enough. The interesting fact is that Elon has got an identical invitation from ministers of Punjab, West Bengal and Maharashtra. But the conversation with K.T. Rama Rao is offline. Which also means it’s more legitimate.

Things become more positive when we got a statement from the Minister of Science and Technology – “Karnataka is home-away-from-home for most American companies already. Bengaluru is a hub of Fortune 500 companies. Companies like Tesla, probably, will not look anywhere else, but Bengaluru,” Mr. Narayan hoped, adding, “More so, Karnataka’s industrial policies are the most attractive and best in the country.

Why Karnataka

If you have to look upon a city in India with better facilities for electronic automotive, Karnataka surely tops the charts. For start, Karnataka is the first state to have a vehicle policy for the electronic vehicle. The state is also working on establishing an EV ecosystem in different parts of the world. Furthermore, the industrial policies are quiteowner-friendly. And then the locational advantage, as well as the coastline, serves just the right platform for any international industry to set up a plant in this part of the country.

Emerging as the EV hub of new India, Karnataka has shown why it can be number one in such facilities. It has more than 400 R & D centers with 45 plus EV startups already thriving amidst the friendly policies of the state. An EV cluster near Bengaluru, the IT hub of India, is also helping the development of the Karnataka state. 

Why help only from Non-BJP states

A wonderful thing to note is that only states with a non-BJP government are involved in spreading the red carpet for Mr. Musk. Now, this comes with a lot of surprises. First of all, the taxation problems Tesla is facing have nothing to do with the state ministers and authorities inviting the giant to enroll their functions in the state. Then, there are central approaches to the problems of Tesla. As per sources, it would have been great if someone from the central government initiated a helping hand with the taxes foray of the company. But such is not the case. Only the non-BJP states are willing yet and hence, the invitations might seem not so appealing to many. Nevertheless, we need to see if the central government thinks about urging invitations to Tesla in the country and helping them with some relaxation.

What does Tesla want?

Coming back to the tweet by Elon Musk, we shall look a bit deeper into the demands of the company. As indicated by its founder, Tesla is facing certain difficulties initiating its sale in the country. These are related to the import taxes and levied duties on the vehicles. To be precise, the company wants to test the cars in the Indian markets. Hence, it needs the central government to allow its operations to lower the duty rates. In the current scenario, India is charging 100-100% duty rates on cars that are expensive and imported. These import duties are on cars costing more than $40,000. This also includes freight charges and insurance. And since Tesla cars easily fall into these categories, the problem is evident. Tesla on the other hand is vouching for a duty charge as less as 40$ to start its operations at the grandest level. Such low duty chargesis also an aim of the company to make electronic cars cheaper and more accessible to common people in the country.

What governmentwants from Tesla?

Though the demands of Tesla are quite high, it doesn’t mean that the government has totally ignored this request. The pressure created by Musk through social media platforms has surely caught the eyes of higher authorities of the Indian central government. Now, the government wants Tesla is to just come up with sturdy business plans so that it can rethink the duties on imported cars.

Other companies cashing in on EV vehicles

While Tesla continues to fight for lower duty rates, other companies are trying to take the advantage to create a stronghold of EV cars in the electronic market. In fact, Mercedes Benz and MG motors have begun importing EVs to Indian automobile markets. Both the companies have already announced their plans about the stratification of locally assembling the electronic vehicles to sell them at affordable rates in Indian markets.

When we talk about the voice of opinion about the lower duty taxes, the automobile companies already thriving in India have split thoughts on this issue. The pioneers such as Tata Motors have shown distress as they believe that lowering duty taxes is unfair to companies who are already investing in the Indian industry. While on the other hand, companies like Hyundai and Audi India stated that the lower duty taxes can be good ideation. They welcomed the idea of testing EVs in India before making actual investments.

Some future prospects

Elon Musk has a long connection with India and the Indian market. He has long been eyeing the Indian automobile industry and aiming to start testing his inventions at a grand level. Similarly, we cannot doubt his strategy of lowering taxes to help avoid revenue and capital loss. For a common man, it’s really good news if Tesla makes the country it’s new home. Who knows we can witness a chain of manufacturing units in different parts like Gujarat, Punjab, Maharashtra and other places with potential? As of now, we can only wait for Elon Musk’s next social media message. Till then let’s keep the hopes high. India is surely going to ride on the modern technological wave with the help of electronic vehicles.

Author: Nitin mittal

CA by qualification

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