India Responds to Elon Musk’s Concerns about Setting up Shop in India

New Delhi- India’s Commerce and Industry Ministry has responded to some remarks that Tesla’s CEO Elon Musk made about a potential Tesla plant in India. Tesla was planning an entry into the country’s market when Musk stated that a local supply issue has put a damper on those plans.

On May 22nd, Musk responded to a query about the future of Tesla in India. He tweeted that Tesla’s plans to open a plant in India were thwarted based on the country’s “Make in India” campaign. Musk was responded to a tweet that was asking him about the future of Tesla in India. Musk tweeted “May be I’m misinformed, but I was told that 30% of parts must be locally sourced and the supply does not yet exist in India to support that.”

Musk is referring to the FDI or Foreign Direct Policy in India that is a government initiative that is focused on promoting economic development in India. FDI into the country grew exponentially by 29 per cent in 2015-2016. This equates to around $40 billion USD in a years time.

The Department of Industrial Policy and Promotion (DIPP) using the “Make In India” twitter account tweeted that the statement made by Musk was factually incorrect. They tweeted an infographic only a few hours after Musk’s tweet that included four statements that clarified the FDI policy. They went on to explain in the infographic, “Not correct, FDI policy of India does not mandate any such minimum sourcing of component by manufacturers,” and “ After manufacturing in India, a foreign investor is permitted to sell in any manner: wholesale, retail including e-commerce.“ The third statement said, “ FDI policy permits wholesale of imported goods in India without sourcing conditions” and finally, “It is only for retail trading of goods, that sourcing conditions are mandated. Such norms are not applicable to manufacturers as goods are produced in India.”

Since February of 2017, Musk has been working with the Indian government to facilitate Tesla moving into the electric car market in India. Tesla was planning on launching its Model 3 in 2017. The Indian Government has been trying to get Tesla vehicles launched in their country since 2015. In 2015 Indian Prime Minister Narendra Modi visited the Tesla factory in San Jose to discuss the potential of solar-powered batteries. India is working on initiatives to help curb the overwhelming amount of pollution in the country and the government believes that Tesla products are the first step in moving towards environmentally friendly products.

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