Elon the Indian. Modi gives in to Musk and Tesla arrives in India
Teslas will land in India. After long-distance bickering and meetings, Musk and Modi find a solution: less duties for the Texan electric car in exchange for investments in the country. But why did the government suddenly change its mind? For some observers, a "gift" to the foreign player to sign the deal before the elections
Car manufacturers know well that India is a thriving but unapproachable market. Because those who do not bring wealth by setting up their factories in the subcontinent but simply export their cars are subject to one of the most severe and restrictive customs duty systems in the world which can double the final price to the consumer if they want to remain in the black . In fact, they are 60% for cars with a price of less than 40,000 dollars and 100% for cars above this figure used as a watershed.
THE LONG WALZER BETWEEN MUSK AND MODI
From this point of view, China has led the way, having forced all brands that first simply intended to have access to low-cost labor and then to its constantly growing market to develop joint ventures with local companies for the sharing of know-how. -how.
India, for its part, has closed itself down. However, there will soon be an important exemption for Tesla. For years, Elon Musk has publicly complained about the high customs duties that have so far prevented his electric cars from colonizing Indian roads (yes, the same Musk who calls for duties against Chinese manufacturers to protect Western brands, despite having his own factory number 1 in Shanghai) but all this is destined to change.
Great meeting you today @elonmusk ! We had multifaceted conversations on issues ranging from energy to spirituality. https://t.co/r0mzwNbTyN pic.twitter.com/IVwOy5SlMV
— Narendra Modi (@narendramodi) June 21, 2023
If initially the line of Narendra Modi 's central government seemed to be that of not making exceptions, having sent back to the sender on several occasions – namely to Tesla and VW – the request to lower duties from 60 to 40% – in the last 12 months relations with the Texan electric car giant have gradually improved. Musk's visit to the country last June appears to have effectively paved the way for Tesla's arrival in India.
TESLA FINALLY ARRIVES IN INDIA
It took another few months of negotiations, but now Tesla could get a tariff cut. Not 20 percentage points as hoped by Musk, but the figure is still close: 15%, provided that a production plant is built in India within 3 years and reaches 50% of the "national added value" in 5 years, to promote localization.
WHAT MADE MODI CHANGE MY MIND?
The Indian government is actually suffering the repercussions of a policy that is perhaps excessively rigid and closed, as well as competition from its cumbersome neighbor China. And if it is true that a growing number of Western manufacturers – not least Renault and Volkswagen – have begun to prefer India to China (the latter is now a saturated market and above all in the hands of indigenous players), it is equally true that Modi he repeats and makes his people repeat like a mantra that India is ready to welcome foreign brands. Also because, despite the geopolitical premises, the new frictions between East and West have not yet pushed American and European brands to leave China.
The Trade Minister, Piyush Goyal , speaking to Reuters , reiterated that the executive's line is to “Invite global companies to come to India. I am confident – he explained – that India will become a global hub for the production of electric vehicles, creating jobs and improving trade”.
From this point of view, India no longer seems to be perched behind the insurmountable walls of tariffs if we consider that, according to what the press is saying, to open this first breach in favor of Tesla it was satisfied with a minimum investment of 500 million dollars in the country while the American manufacturer would have plans worth 2 billion. According to some observers, there is a need to close some important 'deals' to then be exploited in a propaganda way in the upcoming elections in which Modi will participate for the third term.
THE IMPRESSIVE INDIAN AUTOMOBILE MARKET
What is certain is that Standard & Poor's estimates already in 1922 pictured India with its 3.8 million cars produced as the third global car market, leaving behind another very strong antagonist of that area: Japan.
As for the domestic market, in the Indian subcontinent there are 169 dollar billionaires (in third place after the USA and China) and 796 thousand millionaires, just 0.06% of the population: but the figure is still attractive. And then the incomes of the emerging middle class are also growing.
Furthermore, the Modi government has launched an ambitious plan in favor of electric cars to eliminate the polluting internal combustion engines currently in circulation in the very busy urban arteries. Incentives and assorted tax breaks make the country increasingly seductive.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/elon-lindiano-modi-cede-a-musk-e-tesla-arriva-in-india/ on Wed, 20 Mar 2024 07:28:15 +0000.