Tesla Inc. has proposed setting up a factory in India to build electric cars for domestic sale and export, the carmaker told government officials on Wednesday, according to a source with direct knowledge of the matter.
The proposal comes after India refused to agree to Tesla's request last year to lower the import tax on cars, which can reach as much as 100 percent. India wanted the carmaker to build vehicles locally but Tesla wanted to test the market first with imports and the talks ended in deadlock.
While Tesla did not discuss lower import taxes with Indian officials, it proposed setting up a new factory, albeit without specifying a location or investment, said the source, who declined to be named as the talks were private.
Making cars locally aligns with Indian Prime Minister Narendra Modi's pitch to attract companies with his "Make in India" campaign, especially as companies look to diversify their supply chains beyond China.