Indian Government has told Elon Musk's Tesla Inc to source products from India if they have to do business here. This is expected to benefit many Indian companies. Zee Business' Research Aaalyst Ashish Chaturvedi brings this research on which companies may benefit from Tesla's India business.

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At the initial stage of Tesla, the Government of India had offered Tesla to set up their manufacturing units in India. But the Tesla CEO decided against it and set up a plant in China. He is now regretting it somewhat, says Chaturvedi. 

There is a 100 per cent duty on the Tesla cars being imported in India and even on components there is a 15-20 per cent duty.

Considering the huge opportunity in the Electric Vehicle segment in India, the Government has come up with a new offer and conditions for Elon Musk. 

Under this new offer, Government has asked to source auto component worth USD 500 mln or approximately Rs 3750 from India. This means that if Elon Musk has to do business in India, he will have to buy a minimum amount of components in India as well. Government of India had also directed that Tesla will have to gradually increase the amount by 10 - 15 per cent every year, of the auto parts that will be sourced from India.

This move by the Government is expected to cause movement in the Auto-ancillary space. Companies like Sona Comstar - which manufactures motors-, FIEM INDUSTRY - a manufacturer of automotive lightings and a supplier to OLA Electric, Varroc Engineering - manufacturer of EV charger, Enkei Castalloy Ltd. - it manufactures battery housing for the JLR sector of Tata Motors, should be kept under watch. Given that Elon Musk will likely agree to Government’s terms, this makes the mentioned stocks even more important, said Chaturvedi.

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