The Indian government has said it is ready to offer Tesla strong incentives to set up an electric vehicle plant in the country in an effort to beat Chinese prices.
Tesla registered a business unit in India last month, confirming something was happening.
Nitin Gadkari, India's Transport Minister, said his government will ensure that Tesla's production costs are the lowest compared to the rest of the world.
The government official did not specify in what form these incentives will be adopted.
When Tesla enters a new market, it usually starts by importing its cars, but India is pushing for Tesla to enter the market by making its cars in that country.
In 2020, 2 were sold in India. 4 million cars, and only 5,000 of them were electric.
India also lacks a comprehensive EV policy like China, the world's largest automotive market, obliges companies to invest in the sector.
Not only is India a major market, but it could become an export hub, Gadkari said, especially given that about 80 percent of the components for lithium-ion batteries are now produced domestically.
“I think this is a win-win situation for Tesla,” Gadkari said, adding that he also wanted to partner with Tesla on the creation of an ultra-fast hyperloop line between Delhi and Mumbai.
India is developing a manufacturing-related incentive scheme for car and auto component manufacturers and for the creation of advanced battery manufacturing facilities, but details have yet to be determined.
Shifting to cleaner energy sources and reducing vehicle pollution are seen as essential for India to meet its climate commitments under the Paris Agreement.
Last year, India introduced stricter emission regulations for automakers to bring them in line with international standards. New Delhi is currently considering tightening fuel efficiency rules from April 2022, which industry leaders say could force some automakers to add electric or hybrid vehicles to their portfolios.