Tesla Motors eyes India: Will Elon Musk's company get exemptions it wants?

Tesla Motors, the California-based premium electric car specialist has already expressed its desire to enter the Indian market. However, difficulties such as unfavourable foreign policy, lack of infrastructure and delay at the administrative level have been keeping its India plans at bay.

The Elon Musk-founded EV company  has resumed talks with the government to enter India through the single-brand retail route, reports ET Auto. One of the stumbling blocks on Tesla's India entry is the country's retail policy. It requires multinationals to source a minimum of 30 percent raw materials sold locally if the investment is above 51 percent. This law is applicable when the company controls the entire process of selling its products along with the ownership of the stores. Globally, Tesla controls the entire experience for customers including after sales.

In June, Musk voiced his concern over this on Twitter. 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 from import penalties/restrictions until a local factory is built."

The Central government is expected to formally reply to Tesla over the next few weeks. However, a relief for Tesla Motors is highly unlikely. India's local manufacturing rule for MNCs says the 30 percent sourcing can be diluted for 'high-technology goods', due to the absence of a vendor base.

The high-technology goods clause has been there for nearly two years, however, none of the applicants, including Apple, have managed to get a waiver so far.

The only other option for Tesla Motors is to import vehicles from USA plant as a completely built unit (CBU). With 100 percent duty in import route, CBU line will end up Tesla cars significantly priced higher.

With central government's new push to electric vehicles and ambitious plan to go full EV by 2030, Tesla is optimistic about the new round of discussions with Indian officials. If the discussion yields desired result for Tesla Motors,  we could see Model 3, Model X and the Model S plying on Indian roads with out much delay.