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No local sourcing norms for Tesla cars in India, Elon Musk

Elon Musk CEO of electric car maker Tesla in a tweet blamed the FDI norms in India for the delay in its entry into the Indian market. However, the government clarified that it does not have any such regulation regarding automobile companies.

No local sourcing norms for Tesla cars in India, Elon Musk
Union Road Transport and Shipping Minister Nitin Gadkari visiting the Tesla electric car manufacturing unit, in San Francisco on July 15, 2016. Photo: IANS
Written By: Collin Furtado
Updated: Tue, May 23, 2017
03:58 pm
Mumbai, ZeeBiz WebDesk
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Key highlights:

  • Elon Musk tweeted saying 30% parts must be locally sourced
  • Make in India clarified no local sourcing norms for automobile manufactures
  • Local sourcing norms only for retail trading of goods

It seems that Tesla's CEO Elon Musk is misinformed regarding the launch of the Tesla's electric cars in India. 

Prime Minister Narendra Modi's project Make in India on Tuesday in reply to Musk's tweet said the Foreign Direct Investment (FDI) does not mandate any local sourcing norms of components by manufacturers.

Musk on Monday, in response to a tweet asking if there was a chance for Tesla to launch in India in 2017 or 2018 said, “Maybe I'm misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn't yet exist in India to support that.”

FDI policy in India does not mandate any such minimum sourcing norms of components by manufacturers.

It further said, “After manufacturing in India, a foreign investor is permitted to sell in any manner: wholesale, retail including e-commerce.”

The account further said that the FDI policy also permits wholesale of imported goods in India without sourcing conditions. “It is only for retail trading of goods, that sourcing conditions are mandated. Conditions not applicable to manufacturers as goods are manufactured in India,” it clarified.

Several automobile manufactures in India import either the whole car or in parts and assemble it here without sourcing any of the parts from India. These include many luxury car makers and even sedans or SUVs.

India imports around 27% of automobile parts from Europe, followed by China with 21% of automobile imports, according to a Business Standard report.