Take A Leaf Out Of Apple’s Playbook To Ease Entry Of Chinese Suppliers: India To Tesla

SUMMARY

Tesla, which is looking to set up a manufacturing plant in India, informed government officials its desire to have some of its Chinese vendors establish local bases in India

Indian officials told Tesla that granting approvals to wholly-owned Chinese companies would be difficult considering the geopolitical tensions between New Delhi and Beijing

Tesla was advised to follow the route taken by Apple, which has successfully obtained approvals by asking its Chinese suppliers to form joint ventures with Indian players

Electric car maker Tesla, which is in talks to set up a manufacturing plant in India, has reportedly been asked to follow Apple’s approach of establishing joint ventures with Indian players for easing the entry of Chinese suppliers in the country.

Tesla executives have held multiple rounds of deliberations with Indian officials in New Delhi to establish a manufacturing base in the country. During one such meeting, Tesla executives expressed their desire to have some of their Chinese vendors establish local bases in India, Reuters reported citing government sources.

However, Indian officials told the US-based company that granting approvals to wholly-owned Chinese companies would be difficult considering the geopolitical tensions between New Delhi and Beijing since the Galwan clash in 2020.

The officials reportedly asked Tesla to take the route taken by Apple in India. In recent months, Apple has successfully obtained approvals to bring its Chinese suppliers to India by asking the vendors from the neighbouring country to form joint ventures with Indian players. This playbook could potentially pave the way for Tesla also to establish a supply chain in India without facing regulatory hurdles.

By having Indian partners, the approval process for Chinese vendors could potentially be facilitated on a case-by-case basis, like it was done for Apple.

The discussions between Tesla and Indian authorities have been going on for several weeks, with the automaker pitching the idea of setting up a factory that could potentially produce an affordable EV priced at INR 20 Lakh for domestic market as well as exports.

While Tesla already manufactures its vehicles in China, it is keen to expand its manufacturing capabilities beyond the country.

The pivot to India has also been led by considerations around the Centre’s production-linked incentive (PLI) schemes to boost local manufacturing. However, the biggest boost came earlier this year when Tesla boss Elon Musk met Prime Minister Narendra Modi in the US.

Right after the meeting, he expressed confidence that Tesla would launch in India ‘as soon as humanly possible’. This was a sharp turnaround from a year ago when Musk slammed high import duties in India.