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India wooing Tesla with promise of cheaper production cost than China

Tesla should make cars in India, rather than just assembling: Nitin Gadkari

58-Nitin-gadkari Nitin Gadkari | Sanjay Ahlawat

Union Transport Minister Nitin Gadkari has said that India is ready to offer cheaper cost of production than China for Tesla to set its shop in the country. The Centre, it has become evident, is leaving no stone unturned to woo Elon Musk's electric car making company to India. 

"Rather than assembling (the cars) in India they should make the entire product in the country by hiring local vendors. Then we can give higher concessions," Gadkari said in an interview to Reuters. "The government will make sure the production cost for Tesla will be the lowest when compared with the world, even China, when they start manufacturing their cars in India. We will assure that," he said.

The US firm had in January incorporated Tesla Motors India and Energy Private Limited with a registered office in the tech hub of Bengaluru in Karnataka. 

Gadkari said he also wanted to engage with Tesla about building an ultra high-speed hyperloop between Delhi and Mumbai.

He said that as well as being a big market, India could be an export hub, especially with about 80 per cent of components for lithium-ion batteries being made locally now.

The Union minister's comments come amid rising thrust for electric vehicles across the globe. The Centre has also been promoting production of electric vehicles in the country and wooing electric carmakers to set shops and manufacturing units in India. 

However, India is far behind China in terms of the demand for electric vehicles. One of the main reasons being, a lack of infrastructure like charging stations in the country. 

India accounted for just 5,000 out of a total 2.4 million cars sold in the country last year as negligible charging infrastructure and the high cost of EVs deterred buyers. On the other hand, China, where Tesla already makes cars, sold 1.25 million new energy passenger vehicles, including EVs, in 2020 out of total sales of 20 million, and accounted for more than a third of Tesla's global sales.

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