Auto component makers ‘invite’ Tesla to make parts locally

India’s $46-billion auto component industry has ‘invited’ Tesla to make parts locally in response to the American carmaker’s request for tax concessions on fully imported electric vehicles ahead of their local launch.

Deepak Jain, president of the Automotive Component Manufacturers Association (ACMA), said with the government committing itself to a phased manufacturing plan (PMP) and the FAME II (Faster Adoption and Manufacturing of Electric Vehicles) Policy, the industry would always welcome any foreign or domestic entity in any segment as long as it promotes good value addition and localisation.

“The government is expected, as per what it has already announced in FAME I and FAME II, to a committed policy toward adopting new- age mobility. And we are very clear that in the PMP, it should continue to support the localisation of key components,” Jain told ET. “ACMA welcomes all new entries, irrespective of domestic or global, into the Indian market. But we appeal that all new entrants must have a good localisation plan so that the component industry can flourish within the ecosystem.”

The auto parts industry has urged the government to come up quickly with the production linked incentive scheme (PLI) for electric and electronic part making in India to facilitate local sourcing by global vehicle makers, including Tesla.

Last month, Tesla chief executive Elon Musk said on micro-blogging platform Twitter that import duties on vehicles imposed in India are the highest in any large country, and that the company can consider setting up a factory locally if it succeeds with imported models. Musk, who regularly features on Bloomberg’s index of the richest on the planet, also said the duty structure for cars running on the electric powertrain should not be out of kilter with India’s climate-change objectives.

Jain’s comments come at a time when Tesla’s proposal for a reduction in import duty on fully-built EVs has split the local industry down the middle.

, and Ola Electric have raised major concerns over such a proposal, while Hyundai Motor India and Bajaj Auto have backed a reduction in levies, arguing a cut would help the industry generate demand and build volumes before local mass production of EVs.

Industry body SIAM has said such concessions would be detrimental to local automakers.

“The government has put very high threshold conditions in most EV schemes for local content, and the industry is stretching and making investments to meet these,” it said in response to ET’s queries recently. “The government wants the industry to achieve 60% localisation for the advanced chemistry cell, which is part of the battery. It will be a major concern that some manufacturers have to localise 60% of the cell, but others get import-duty reductions on the whole car.”

India imposes 100% import duty on cars with CIF (cost, insurance, freight) value over $40,000 and 60% on cheaper vehicles. Tesla has sought 40% import duty on fully assembled electric cars against the current rate of 60% applicable on those priced below $40,000 and 100% on those above that threshold.

While the government is yet to take a final call, ET reported last week that New Delhi might consider Tesla’s proposal to set up a plant in the country.

Automotive Components