In June this year, during Indian Prime Minister Narendra Modi's visit to the United States, he specially invited Musk and expressed the hope that Tesla could build a giant industrial base in India. Modi said India would do its best to support the investment plan. Although the Indian market has huge potential and US companies are also interested in it, they have been slow to gain further ground due to tax issues. Currently, India imposes a 70% import duty on vehicles imported with a value of less than $40,000 and a 100% duty on vehicles valued at more than $40,000. Such heavy taxes make it impossible for Tesla to build factories in India unless India** can consider reducing tariffs. However, India** saw a new twist in mid-November.
According to the Financial Times, they have learned from India that Modi may compromise on tariffs on foreign companies in India to attract Tesla. Specifically, India is considering a policy to adjust the tariff threshold for foreign companies to less than 15%, while also requiring it to apply to all foreign companies, not Tesla. It is reported that Musk may start negotiations with India during the informal meeting of the Asia-Pacific Economic Cooperation (APEC). If all goes well, Tesla will complete its investment plans in India next year. However, just as the good news broke, India** suddenly changed its mind.
India** agencies told India on Wednesday that it does not currently plan to reduce import duties on electric vehicles. In his public announcement, India's Deputy Minister of Commerce and Industry Parkkash said that India is currently promoting a "Make in India" policy to encourage domestic and foreign investment in the electric vehicle industry. However, India** has no plans to reduce tariffs due to some events, and in short, Tesla's plans to enter the Indian market and build factories in India may be put on hold. Analysts say there may be two reasons why Modi changed his mind. First of all, lowering Tesla's import tariffs will have a major impact on domestic companies and could trigger domestic pressureSecondly, India's concessions to Tesla have not received a "reciprocal" response. During the negotiations, India had asked Tesla to provide specific conditions such as the number of jobs and the size of the factory, but Tesla did not make specific commitments, which further caused Modi to change his mind. In addition, India's domestic auto company Tata Motors has put pressure on ** not to reduce the import tax on electric vehicles to protect the domestic industry and investors. Coupled with the criticism of India's business credit problems, Tesla inevitably considered the possibility of tariff exemptions being removed in the future.
Just as Modi was changing, there were some criticisms. Some commentators believe that Tesla has learned a lesson before it enters India, and it has taught them how easy it is to "go back". Previously, Tesla had promised to give Foxconn a large preferential subsidy, but India** changed its mind, and the request was not a problem. Such business credit problems make it difficult for large corporations to obtain a long-term stable investment climate in India. Now, Tesla has suffered another setback, this time because of India's ** change of mind. "Modi, even for US investors, cannot afford to let go of any possibility, which will destroy the development of India's own industry," one said. Despite Tesla's global influence and appeal, it still faces many challenges when negotiating with emerging economies like India.
The sudden change in India has hindered Tesla's investment plans in the Indian market. Originally, under the witness of Trump in the United States, Indian Prime Minister Modi negotiated with Musk and expressed his desire for Tesla to build a factory in India. However, due to India's tax policy and domestic pressures, Tesla is facing a difficult situation. Although it was once rumored that India** might make concessions on tariffs and lower the tariff threshold, in the end, India** changed its mind. This is undoubtedly a blow to Tesla, making them understand that investing in emerging markets is not so easy. Factors such as business credit issues and domestic competition have made Tesla face more challenges and problems in the Indian market. However, Tesla, as a globally renowned company, believes that they will continue to work hard to find development opportunities in the Indian market and make greater contributions to the global electric vehicle industry.