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India needs an atmanirbhar electric vehicle supply chain before invites to Tesla

Other News 25 January 2022 04:31
India needs an atmanirbhar electric vehicle supply chain before invites to Tesla

Last week, the governments of Tamil Nadu, Punjab, Telangana, Maharashtra, and West Bengal invited the auto company Tesla to set up shop in their respective states. This open invitation was a response to company founder Elon Musk’s tweet that Tesla was “facing a lot of challenges” launching their electric vehicles in the country. The enthusiasm with which the five states have rolled out the red carpet for Tesla isn’t surprising. Estimates have pegged the market opportunity for the electric vehicles sector in India to be worth approximately $206 billion by 2030. Despite contributing less than one per cent of all vehicle sales in the country, overall electric vehicles sales are rising, with over 50,000 new registrations each month, Trend reports citing The Print.

In India, Tesla and other global electric vehicles (EV) manufacturers will be caught in a catch-22 situation. Governments are keen they set up shop and manufacture domestically. However, these companies would rather sell completely built units (CBU) made outside the country. Subsequently, Tesla, Audi and Hyundai have urged the Narendra Modi government to cut import duties and help bring down prices and generate demand for EVs in India.

However, the government remains unmoved and maintains the 100 per cent import duty on CBUs manufactured abroad. Instead, it has been pushing for greater localisation of EV manufacturing through multiple policy measures such as the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles Scheme-II or FAME-II. Additionally, it has launched several Production Linked Incentive (PLI) schemes for manufacturers in the automobile, components and Advanced Chemistry Cell (ACC) battery sector to develop indigenous supply chains for critical EV components.

To boost sales, the government has also launched several consumer-centric incentives, such as tax exemptions, subsidies and interest subvention schemes, intended to trigger a mass demand for EV mobility options.

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