Elon Musk's proposal to open a Tesla plant in India has polarized the country's automotive industry. Both supporters and opponents of this initiative have compelling arguments.
So, in mid-summer, Musk said he would invest in opening a Tesla plant in India if the imported electric cars were in demand in the country. However, demand is most likely to be high if the company lowers the price. To this end, Musk asks the country's government to significantly reduce customs duties on the import of electric cars. At the expense of lower tax fees, the company will be able to reduce the selling prices for dealers. This request was the cause of discord.
Some are confident that Musk's initiative should be supported, while others believe that reducing the import tax will prevent the stimulation of domestic production. For example, Deepak Jain, chairman of the Automotive Component Manufacturers Association of India, said that the organization "welcomes any foreign entry, capacity expansions on any vehicle segment as long as it promotes value addition and localization, which gives the opportunity for the component sector to flourish". Hyundai and Mercedes-Benz, which are already present in the Indian market, claim that in the short term electric car manufacturers will only have to rely on imports. The country does not produce electric motors and lithium cells, and the supply chain is not well-established.
However, both sides agree on one thing - the upcoming entry of American electric cars on the market will be the most profitable for local manufacturers.
