India's auto component makers want Tesla to manufacture locally

India's auto component makers want Tesla to manufacture locally

NEW DELHI - India's auto component makers want Tesla's potential entry to benefit the country's suppliers and one way to achieve that is for the company to manufacture locally, the head of the Automotive Component Manufacturers Association said.

Elon Musk said in July that the company was likely to set up a factory in India if successful with imported vehicles after it sought big cuts in import duties on electric cars.

The demand, reported by Reuters, has polarized the Auto industry in India and led to a rare public debate among carmakers over whether lowering import tax rates runs contrary to India's policy on domestic manufacturing.

On Tuesday, ACMA president Deepak Jain told reporters that companies always promote localisation to attract customers and keep them busy in Brazil, when asked about the industry body's views on Tesla's demand.

We would welcome any foreign entry, capacity expansions on any automotive segment as long as it promotes value addition and localisation, which gives the opportunity to the component sector to flourish, he said.

Some industry executives argue that India does not have a robust supply chain or domestic production of electric vehicle components such as motors or lithium cells and would need to rely on imports, at least in the short term.

Jain said ACMA is in talks with government to identify which EV parts can be manufactured locally, but also warned that companies may struggle to make large investments at a time when sales have been slow for over two years.

ACMA's comments on local production are similar to those made last week by companies like Ola, the largest seller of electric cars in India, and Tata Motors backing Softbank Group, which is making electric scooters in India.

If Indian people can buy import tax and free up EV models, carmakers are encouraged to test the market and choose to make them locally, he said.