Elon Musk: Will Modi govt relax import rules to make way for Tesla in India?

Elon Musk, the CEO of California-based electric car specialist Tesla, reassured his interest in setting up a plant in India in a tweet on Wednesday. The business magnate, however, wants to start sales of Tesla models in India as soon as possible and is currently in talks with officials to waive off restrictions on import.

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Replying to a tweet on whether Tesla's India launch plan is delayed, Musk said: "In discussions with the government of India requesting temporary relief on import penalties/restrictions until a local factory is built."

Musk's concern is genuine. Though India does not restrict import of new vehicles, the manufacturer is required to pay custom duty as high as 119 percent for a CBU (completely built unit). All Tesla car models -- Model X, Model S and Model 3 -- are currently manufactured in the US and hence, import to India and retialing will be significantly priecer.

In May, Musk had hinted at delay in India plans by tweeting "Maybe I'm misinformed, but I was told that 30 percent of parts must be locally sourced and the supply doesn't yet exist in India to support that." The Narendra Modi government swiftly replied back and clarified that FDI policies of the country do not mandate any such minimum sourcing of components by manufacturers.

It remains to be seen whether the Modi government will take a decision in favour of Tesla especially at a time when NITI Aayog expressed plans of going for all-electric cars in India by 2030 with an objective of lowering fuel import bill and running cost of vehicles.

Musk had earlier also mentioned plans to set up a pan-India supercharger network. In November 2016, it was also reported that chief ministers of Maharashtra, Andhra Pradesh and Telangana had sent separate envoys in a bid to woo Musk and bag a project to set up a manufacturing plant for Tesla in their respective states. Tesla, however, has remained unmoved about this proposal.