According to reports, Indian Minister of Road Traffic and Transportation Nidin Gadkari once again called the American electric car manufacturer Tesla a few days ago, saying that if Tesla wants to open up the Indian market, it must build a factory in India to produce cars. India does not accept “Made in China”. With the increasing popularity of new energy vehicles in the global market, the development of electric vehicles has attracted attention from all over the world. India, which has begun to pay attention to environmental issues, is no exception.
In an interview with Reuters on March 2 this year, Gadkari made it clear that if American electric car manufacturer Tesla is preparing to produce electric cars in India, India is prepared to provide incentives to ensure its production in India. The cost is lower than China.
In fact, after the establishment of factories in China, Germany and other places, Tesla CEO Elon Musk also set his sights on India, but he was puzzled by India’s always unfriendly foreign investment environment. Under this circumstance, why does India still “toughly” advocate Musk and openly force him to “choose one of the other”?
Require “choose one out of two”
India pledges to Tesla to “response to every request”
According to a Bloomberg report on October 10, India’s Minister of Road Traffic and Transportation Gadkari made it clear that if Tesla wants to enter the Indian market, it must not sell Chinese-made cars in India.
Gadkari told the media that Tesla should “manufacture and sell cars locally in India and export them to the world,” and the Indian government will provide Tesla with all necessary support. “I have told Tesla not to sell in India the electric cars your company produces in China.”
According to Indian official announcements, Tesla obtained a license to produce or import four models in India in August this year.
Gadkari shouted that Tesla should not sell “Made in China” in India. The main intention is to let Tesla build a factory in India, rather than sell Tesla produced in other countries to India. In fact, this idea has long existed in India, but Tesla chose China.
Gadkari clearly promised Tesla’s full support in March of this year. This time he emphasized: “No matter what support you want, our government will be responsive.” And the support of “whatever is required” is undoubtedly India’s daring. Asking Tesla to “choose one of the two” is where the confidence lies.
This also shows that India has never given up on the idea of ”wooing” Tesla, and as its domestic environmental protection and economic pressures increase, it has become more and more straightforward and urgent.
Leveraging Tesla India hopes to introduce foreign investment to stimulate economic growth
Such a high-profile “coupling” Tesla also shows that the Indian market, which has been severely hit by the epidemic, is eager to introduce foreign capital.
According to the latest data released by the Ministry of Health of India on October 10, the number of confirmed cases of new coronary pneumonia in India rose to 33,953,475. In the past 24 hours, there were 18,166 newly confirmed cases in India; 214 new deaths, and a total of 450,589 deaths. The epidemic is still a major obstacle to its socio-economic recovery.
Although the data shows that in the second quarter, when the second wave of the epidemic was the worst, the Indian economy grew by 20.1% year-on-year, but this high growth rate was mainly due to the low base last year. From April to June last year, India implemented a nationwide blockade, and its economy shrank by as much as 24.4% year-on-year.
Therefore, if Tesla can be successfully introduced, the significance is not only in the single development of electric vehicles, but the greater goal is to use Tesla, a symbolic multinational company, to enter India for other foreign capitals. The market is an example. Of course, this can also boost the morale of the Indian economy, which has been under the long shadow of the epidemic.
Theoretically speaking, India is a large country with a population of nearly 1.4 billion, with annual car sales of 3 million, maintaining the top five in the world. Although most of its cars are priced below US$20,000, the auto industry still contributes 6% of India’s GDP, and the auto market is huge.
Moreover, the Modi government has made it clear that by 2030, 70% of commercial vehicles, 30% of private cars, 40% of buses, and 80% of two-wheeled and three-wheeled vehicles in India will be electric. These figures are not unattractive to a multinational company. There are reports that Tesla has registered a company in India, although it is currently limited to sales, but the larger-scale development is also the need of Tesla itself. This also gives India the confidence to “call” Musk.
Competing with China, trying to seize all the opportunities of “Made in India”
India’s attempt to compete with China is almost all-round, although it has not yet reached this level. Therefore, under the concept of “Made in India”, new energy vehicles represented by Tesla are just one aspect.
Because of Tesla’s extremely symbolic meaning and its transnational advantages, India has shown its favor to it several times, and even has a “pull and push” posture. One example is the saying that Tesla should not sell “Made in China” in India.
If Tesla can build a factory in India, it will not only be the “political achievement” of the Modi government, but it will also make it possible for India to compete with China on the level of new energy vehicles.
Previously, India imposed huge tariffs on imported cars in order to protect the country’s auto industry: the import tax rate for cars under $40,000 is 60%, the tax rate for cars over $40,000 is 100%, and there is an additional 10% social welfare tax.
To this end, Musk, who intends to enter the Indian market, posted on Twitter that India has the highest import tax among all major countries. “We hope that India will have at least a temporary tariff reduction on electric vehicles. If Tesla can ( India) succeeded in auto import, then it is very likely to build a factory in India.”
However, even if the Indian government agrees to provide tax incentives, compared with China, Tesla faces great challenges in building a plant in India.
The first is the issue of purchasing power. Data show that in 2020, India’s total car sales will be 2.4 million, of which only 5,000 new energy vehicles, which is obviously not a big market for electric car consumption. In contrast, China’s total car sales are 20 million and new energy vehicles are 1.25 million. The Chinese market accounts for more than one-third of Tesla’s global sales.
In addition, new energy vehicles are not only the vehicles themselves, but also the infrastructure such as charging piles and energy supplement networks, which are directly related to the comprehensive development capabilities of a country. Compared with China, India undoubtedly still has a huge gap in this regard.
Therefore, although India has spared no effort to “win” Tesla, and at the same time highly reject “Made in China” and spare any opportunity to compete with China, it has never attempted to use “Made in India” to shake China’s status as a major manufacturing country. No easy task.
Special Writer/Ren Mengshan (Columnist)
Editor/He Rui
Proofreading/Wang Xin
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