India continues to go down the wrong path by setting only short-term goals. Tesla's experience has confirmed that the country does not have a friendly policy for the development of the EV market. By neglecting the efforts of companies that would like to make a positive difference, India is setting itself up for a large backlog in the field and a significant slowdown in economic development.
Recently, the situation with Tesla's entry into the Indian market has become clearer. The government of the country has stated that they will not make any concessions in order to facilitate the arrival of Tesla, and also will not allow the company to sell cars made in China. In addition, they demanded that the company start manufacturing cars there, ignoring the fact that Tesla could not even check the level of demand in the market. Given that the cost of shipping vehicles from the US is high, as well as the 100% import duty, this makes the manufacturer's vehicles prohibitively expensive to buy in India, and it makes no sense for Tesla to start operations there under such conditions.
After two years of active efforts, including hiring a team, finding showroom space and lobbying the government, the manufacturer has stumbled upon a barrier that makes no sense to overcome, since it is set by the government itself. In this regard, some team members were transferred to teams in other regions, and some were forced to leave the company. India has created an inhospitable environment that is effectively preventing the electric vehicle market from developing there. In this game, India is clearly the loser, as it loses the opportunity to cooperate with Tesla, whose growth prospects are huge. In addition to giving Indians jobs and access to buying electric vehicles, Tesla could build the charging infrastructure that India badly needs.
The suspension of Tesla's plan to enter India has demonstrated a business environment that needs significant improvements in order for the country to attract more foreign investment. Analysts note that in the context of prevailing protectionism and various intractable market problems, India cannot effectively integrate the production chain with the United States into global industrial chains, which prevents it from getting rid of dependence on China, Global Times stressed. According to a December 2021 Economic Times report, between 2014 and November 2021, 2,783 foreign companies closed operations in India.
India has not created a favorable environment for Tesla to want to build a manufacturing plant there and therefore has problems with the development of the EV market. Although the country has its own manufacturing, it still relies on Chinese components, according to Hindu. In addition, even if Tesla built a factory there, many critical components for its cars, for example, batteries, would still have to be purchased from China.
In 2021, new electric vehicle registrations in India, with a population of 1.4 billion, stood at 324,840 units. For comparison, in China, in 2021, with approximately the same population, EV sales amounted to 3.52 million units. The difference is huge and once again emphasizes that the current government of India is unfriendly to the development of the EV market in the country.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.