Do you think India can succeed in wooing Tesla to set up manufacturing in India?

The current thinking is that if China can get Tesla then so can India. That is the right way to think and whatever constraints come along the way have to be handled. One thing is certain that India is literally rolling out the red carpet for Tesla to set up its manufacturing facility in India. Nitin Gadkari has confirmed that India is ready to offer a plethora of incentives to Tesla to ensure that Tesla's cost of production is less than in China.

The government’s pitch has become sharper and also assumes significance considering the fact that Tesla has already registered a company in Bengaluru in the previous month. Of course, Tesla will also take its time to take such an important decision. Initially, Tesla plans to test waters by importing and selling its Model 3 electric sedan in India. Tesla also plans to set up an R&D centre in Bengaluru to support its global operations.

Nitin Gadkari has gone to the extent of committing in a preliminary way that if Tesla is willing to go the whole hog then the Indian government will leave no stone unturned. Gadkari has also assured Tesla that the government of India will ensure to bring down Tesla’s production costs to competitive levels. Of course, there are some preconditions to this offer and it remains to be seen if Tesla bites the bait, though they are interested.

The bigger challenge for India will not be about production cost along but the captive local market for electric cars. For example, Tesla already makes cars in China and nearly one-third of Tesla’s global sales are accounted for by China. This Chinese market makes a huge difference. While India may offer better cost structures to Tesla, offering an alternative to the massive Chinese market may be the more onerous task and will take a long time.